Background

In July 2025, EFRAG significantly amended the European Sustainability Reporting Standards (ESRS) to make them simpler, more aligned with global frameworks, and easier to implement. The revisions include a 57% cut in mandatory datapoints and a 68% reduction overall, along with a restructured double materiality assessment that begins with the business model. All mandatory disclosures are now clearly marked, and optional guidance has been moved into a new Non-Mandatory Illustrative Guidance (NMIG) document. Relief mechanisms were also introduced to ease the reporting burden where necessary. 

Changes to the ESRS Structure

The ESRS structure has gone through considerable modification.In the revised structure, sub-sub-topics are now sub-topics and several of them are either amended or moved or merged or added or removed. Table 1 presents the key structural changes. 

E1 Climate Change 

Amendments have achieved a 53% reduction in datapoints and a 65% decrease in word count. Key changes include:

• Transition Plan Disclosures (E1-1): Consolidated to emphasize high-level descriptions, clarifying that comprehensive management details are not required. A new datapoint on dependencies, including locked-in emissions, aligns with IFRS S2, while EU Paris-aligned Benchmarks were eliminated.
• Climate-Related Risks (E1-2, E1-3): Revised for coherence, specifying key methodological elements without mandating scenario analysis. Enhanced alignment with IFRS S2.22 strengthens climate resilience disclosures.
• Policies and Actions (E1-4, E1-5): Policy disclosures are streamlined, referencing general ESRS requirements. Action disclosures retain essential elements, such as decarbonization levers, but omit detailed financial linkages and EU Taxonomy references.
• Targets (E1-6): Prioritize absolute GHG reduction targets aligned with a 1.5°C trajectory, eliminating baseline normalization and subsidiary-level requirements.
• GHG Emissions (Scope 1, 2, 3) (E1-8): Aligned with the GHG Protocol, emphasizing financial control boundaries. Biogenic emissions are now in the main disclosure, with flexibility on GWP values. Total GHG emissions and intensity metrics were removed.

E2 Pollution

Amendments have achieved a 61% reduction in datapoints and a 68% decrease in word count. Key changes include:

• Material IROs (E2): Eliminated entirely, with content integrated into ESRS 2 General Disclosures, removing redundancies and the LEAP approach guidance.
• Policies (E2-1) and Actions (E2-2): Streamlined to reference ESRS 2 General Disclosures, deleting pollution-specific requirements and mitigation hierarchy details, now in non-mandatory illustrative guidance (NMIG).
• Targets (E2-3): Reduced to reference ESRS 2, with ecological threshold requirements simplified and moved to NMIG, reflecting methodological immaturity.
• Pollution of Air, Water, and Soil (E2-4): Simplified to focus on material emissions, with microplastics disclosure enhanced by including secondary microplastics and aligning with REACH Regulation. 
• Substances of Concern (E2-5): Clarified requirements, distinguishing manufacturers/importers from users, who focus on substances of very high concern, aligned with REACH thresholds.
• Anticipated Financial Effects (E2-6): Removed due to immature methodology, centralized in ESRS 2.

E3 Water

The amended ESRS E3 is significantly lighter with datapoints by 70% and word count by 82%.

• Scope Adjustment: The term “marine resources” removed from the standard’s title; related disclosures shifted to E5 (Resource Use) and E4 (Biodiversity).
• Material IROs (E3-IRO-1): Eliminated, with content integrated into ESRS 2 General Disclosures, removing LEAP approach guidance.
• Policies (E3-1): Simplified to reference ESRS 2 GDR-P, retaining core disclosure on water-related impact management. Sustainable oceans and related ARs moved to non-mandatory illustrative guidance (NMIG).
• Actions (E3-2): Consolidated to focus on key actions and resources, referencing ESRS 2 GDR-A. Mitigation hierarchy details relocated to NMIG.
• Targets (E3-3): Streamlined to align with ESRS 2 GDR-T, with ecological threshold guidance moved to NMIG.
• Water Metrics (E3-4): Maintains mandatory disclosures on water consumption, recycling, storage, and adds water withdrawal and discharge as mandatory, reflecting stakeholder emphasis on water balance. Water intensity removed; geographical disaggregation retained.
• Financial Effects (E3-5): Deleted due to immature methodology, centralized in ESRS 2.

E4 Biodiversity and Ecosystems

Amendments have reduced both datapoints and word count by 78%, streamlining disclosures, enhancing clarity, and aligning with EU environmental objectives. Here are the highlights::

• Transition Plan (E4-1): Focuses solely on biodiversity transition plans, made mandatory but conditional on plan existence and prior public disclosure. Strategy resilience provisions moved to ESRS 2 SBM-3.
• Material IROs (E4-IRO-1): Removed, with content consolidated into ESRS 2, eliminating LEAP approach guidance and scenario analysis specifications, now in non-mandatory illustrative guidance (NMIG).
• Policies (E4-2): Streamlined to reference ESRS 2 GDR-P, retaining specifications on traceability and sites near biodiversity-sensitive areas (BSAs). Other details moved to NMIG.
• Actions (E4-3): Simplified to reference ESRS 2 GDR-A, focusing on biodiversity offsets. Mitigation hierarchy guidance relocated to NMIG.
• Targets (E4-4): Aligned with ESRS 2 GDR-T, retaining biodiversity offset specification. Ecological threshold requirements are simplified and moved to ESRS 2.
• Metrics (E4-5): Consolidated site-specific provisions, using “location” for flexibility. Material metrics disclosure retained, with detailed indicators moved to NMIG.
• Financial Effects (E4-6): Deleted due to methodological immaturity, centralized in ESRS 2.

E5 Circular Economy

EFRAG has achieved a 60% reduction in datapoints and a 72% decrease in word count. Key changes include:

• Scope Clarification: Marine resources explicitly included as resource inflows, aligning with E3 and E4. Terminology updated from “products and materials” to “products and services” for broader applicability.
• Material IROs: Removed, integrated into ESRS 2 General Disclosures, with affected communities addressed under ESRS 1 for cross-sector relevance.
• Policies, Actions, Targets (E5-1, E5-2, E5-3): Streamlined to reference ESRS 2 GDR-P, GDR-A, and GDR-T, with circularity and eco-design principles added for policies, aligned with EU regulations. Other elements moved to non-mandatory illustrative guidance (NMIG).
• Resource Inflows (E5-4): Simplified to focus on key materials, with new datapoint on critical and strategic raw materials. Technical and biological material disclosures moved to application requirements (ARs).
• Resource Outflows (E5-5): Consolidated to cover products, services, and waste. Durability and repairability shifted to narrative disclosure; new datapoint on recycled materials in key products.
• Financial Effects (E5-6): Deleted due to methodological immaturity, centralized in ESRS 2.

These changes are currently open for public consultation until 29 September 2025, with final technical advice expected to be submitted to the European Commission by 31 October 2025. The release of amended ESRS marks a significant step in streamlining non-sustainability disclosures in the EU. As we wait for the Omnibus proposal to get finalized, companies expected to be in-scope need to assess the changes and refine their reporting strategy. 

Abbreviations

• AR: Application Requirement
• BSA: Biodiversity-Sensitive Areas
• DNSH: Do No Significant Harm
• EFRAG: European Financial Reporting Advisory Group
• E-PRTR: European Pollutant Release and Transfer Register
• ESRS: European Sustainability Reporting Standards
• GDR-A: General Disclosures – Actions (referenced in ESRS 2)
• GDR-P: General Disclosures – Policies (referenced in ESRS 2)
• GDR-T: General Disclosures – Targets (referenced in ESRS 2)
• GHG: Greenhouse Gas
• IFRS: International Financial Reporting Standards
• IRO: Impacts, Risks, and Opportunities
• LEAP: Locate, Evaluate, Assess, and Prepare (an approach for materiality assessment)
• NMIG: Non-Mandatory Illustrative Guidance
• PATs: Policies, Actions, and Targets
• REACH: Registration, Evaluation, Authorisation and Restriction of Chemicals (Regulation)
• SBM: Strategy and Business Model (referenced in ESRS 2, e.g., SBM-3)
• SFDR: Sustainable Finance Disclosure Regulation