ESRS simplification: a balanced compromise, but deeper cuts could be fatal

Brussels, 29 September 2025

In its response to EFRAG’s consultation on the review aimed at simplifying the European Sustainability Reporting Standards (ESRS), Eurosif highlights that the suggested modifications to the ESRS overall manage to balance investors’ needs with the simplification objective. In particular, the removal of duplications and clarifications of key concepts significantly improves their usability.

At the same time, Eurosif warns against any further reductions which could limit availability of disclosures useful for investment decisions. EFRAG’s suggestions regarding anticipated financial effects could create significant data gaps and lead to fragmentation between the ESRS and international reporting frameworks. Moreover, some of the more extensive reliefs proposed for preparers risk undermining the basic reliability of reported information.

Nathalie Dogniez, Chair of Eurosif, said: “The reduction of data points by 57% already represents a substantial simplification of the reporting requirements. Any further cuts risk removing vital data that investors need to make informed decisions, channel finance for the transition to a low-carbon economy and comply with their own regulatory requirements.”

On the anticipated financial effects, Pierre Garrault, Eurosif Senior Policy Adviser commented: “Not knowing how climate change and other sustainability risks may affect the performance of companies is a dangerous blind spot for investors – one that compounds over the whole economy. We strongly urge EFRAG to maintain mandatory quantitative and qualitative disclosures in this respect.”

The following proposals create concerns for investors:

• Anticipated financial effects: this information is essential for investors to make informed decisions and is critical to determine financial materiality. Quantitative and qualitative disclosures should remain mandatory. Allowing the voluntary reporting of this information will create significant data gaps and jeopardise the usability and credibility of the entire reporting framework for users.
• Cross-cutting reliefs: EFRAG introduces a range of exemptions for companies, such as for requirements causing “undue cost and effort”. While we acknowledge the need for limited reliefs, the lack of safeguards and incentives for improvement may lead to abuses restricting the availability and comparability of key information across sustainability reports.
• Reduced ISSB alignment: EFRAG deletes data points required under international reporting standards and introduced reliefs that diverge from the global baseline of the ISSB standards. This means reducing interoperability between the ESRS and international standards, less comparability of disclosures for investors, and additional reporting burdens for companies.
• Climate-related & biodiversity disclosures: it is essential that disclosures on climate transition plans remain robust and reliable, with only cautious application of reliefs. Disclosures on climate scenarios and biodiversity targets must be maintained to provide investors with the information required to assess companies’ long-term resilience and alignment with sustainability objectives.
• SFDR PAIs: some data points that investors need to report under the Sustainable Finance Disclosure Regulation have been deleted. While most of this data can be derived from other indicators, this causes additional implementation burdens for investors. The removal of a dedicated indicator on cases of non-respect of human rights principles may also lead to compliance challenges, as this information is often required for investors' exclusions policies.
• Business conduct: we question the removal of disclosures on lobbying activities. Information on companies’ engagement activities is useful for investors to assess the credibility and consistency of their commitments.

For any queries, please contact pierre.garrault@eurosif.org

The press release is available here as a PDF file.

For our full response, consult the document here.