When the Omnibus reforms were first announced by the European Commission, I noted that the European Sustainability Reporting Standards (ESRS) would be revised. While we initially expected these revisions after Omnibus’s initial passage, it appears that the Commission is forging ahead. On March 28, the Commission sent a letter to EFRAG requesting that the ESRS be “simplified.” Linklaters discusses the contents of this letter in a recent memo detailing the request to revise the ESRS:
“In particular, the revision of the ESRS should:
- substantially reduce the number of mandatory ESRS datapoints by: (i) removing those deemed least important for general purpose sustainability reporting; (ii) prioritising quantitative datapoints over narrative text; and (iii) further distinguishing between mandatory and voluntary datapoints. This should be done without undermining interoperability with global reporting standards and without prejudice to the materiality assessment of each undertaking;
- clarify provisions that are deemed unclear;
provide clearer instructions on how to apply the materiality principle, to ensure that undertakings only report material information and to reduce the risk of assurance service providers inadvertently encouraging; - undertakings to report information that is not necessary or dedicate excessive resources to the materiality assessment process;
- simplify the structure and presentation of the standards;
- further enhance the already high degree of interoperability with global sustainability reporting standards;
- make any other modifications that may be considered necessary, taking into account the experience of the first application of the ESRS.”
As I noted previously, the ESRS are promulgated through a delegated act. This means that the Commission can more easily change the ESRS, provided that those changes are in line with the essential elements of the CSRD. The Commission is giving EFRAG until October 31 2025 to revise the ESRS and the revisions are expected to affect 2027 CSRD reporting.
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