European Commission Releases Updated Draft Final ESRS for Public Feedback

Earlier today, the European Commission published updated draft final versions of the European Sustainability Reporting Standards (ESRS) to be used for reporting under the Corporate Sustainability Reporting Directive. In this post, we take an initial look at today’s draft ESRS and discuss the related public feedback process.

As noted by the Commission in its announcement, compared to the current ESRS: “The draft revised ESRS reduce mandatory datapoints by over 60% and total datapoints by over 70%. The new ESRS are shorter and clearer, introduce new flexibilities for companies, and simplify the materiality assessment used to determine what must be reported. Overall, these changes are expected to reduce reporting costs per company by more than 30%.”

What’s New?

Draft ESRS were delivered by EFRAG to the Commission late last year. In its announcement, the Commission noted that the revised ESRS largely build on the technical advice from EFRAG, but they are not identical: “The Commission is proposing targeted adjustments to EFRAG’s advice to further ease the reporting burden without undermining the CSRD’s policy objectives.” 

As noted by Responsible Investor this morning: “[T]he Commission has not endorsed new measures for simultaneous compliance with the ISSB framework despite mounting pressure to do so from groups including German corporates and the ISSB.” RI subscribers can read the full article here.

Per today’s draft Delegated Regulation (and in the words of the draft Delegated Regulation), the following are the main changes being proposed by the Commission. Ropes & Gray will be providing additional analysis and perspective in the coming days and weeks through various channels. 

• Materiality and materiality assessment: The proposed text clearly states that the undertaking is not expected to meet the specific information needs of each individual user and stresses that the objective of the standards is to ensure the reporting of information that is decision-useful for users. It introduces a clear definition of the concept of “informed assessment”. It specifies that undertakings “shall not” report information that is not material, except in certain clearly defined circumstances rather than stating that the undertaking “is not required to” report information that is not material. Lastly, a new provision emphasizes that the “top-down” approach to materiality assessment allows the undertaking to avoid unnecessary work and in general to avoid assessing the materiality of each individual impact, risk or opportunity.
• Fair presentation: The proposed text clarifies that fair presentation applies to the overall sustainability statement and does not apply to each datapoint. It also states more clearly that the application of ESRS results in fair presentation. The modifications made regarding materiality and materiality assessment will also facilitate the application of the principle of fair presentation.
• Level of aggregation and disaggregation: The proposed text introduces greater discretion to the undertaking regarding the need to consider specific geographical contexts when carrying out the materiality assessment. It also clarifies that the level of disaggregation for materiality assessment does not imply that information must be reported at that same level of disaggregation.
• Omission of information: The proposed text integrates new provisions derived from the Omnibus I Directive that allow undertakings to omit certain information in certain circumstances, including information that could be seriously prejudicial to the commercial position of the undertaking.
• Anticipated financial effects: The proposed text states that reporting anticipated financial effects is likely to involve estimates and that these can be updated in the future in light of new information without this constituting a reporting “error”. It also clarifies that the provisions that allow undertakings to omit certain information in certain circumstances, including information that could be seriously prejudicial to the commercial position of the undertaking, also apply to reporting on anticipated financial effects.
• GHG emissions: The proposed text aligns more closely with global sustainability reporting standards by giving undertakings the flexibility to use either the financial control approach or the operational control approach when defining the reporting boundary to be applied.
• Climate transition plans: The proposed text requires undertakings that report transition plans with targets that are not compatible with 1.5C target to be transparent about this.
• Microplastics: The proposed text limits the disclosure requirement to primary microplastics. For reasons of feasibility and proportionality it does not require undertakings to report metrics on secondary microplastics.
• Emission of pollutants: Specification that the decision on which pollutants are material for reporting purposes should be taken following a managerial assessment that considers the undertaking’s activities and sector of operation.
• Substances of very high concern: A new phase-in provision of one year for reporting on substances of very high concern for undertakings that are users of articles containing such substances.
• Coherence with CSDDD: The text includes a number of technical modifications regarding due diligence to ensure better alignment with the CSDDD.
• Human rights incidents and incidents of discrimination: The text clarifies that only “substantiated” instances are to be reported, and that not all instances are necessarily substantiated instances. It also refers to “ongoing” judicial and non-judicial proceedings rather than to proceedings that have been “initiated”.
• Asset management activities: The proposed text includes new provisions to avoid the risk that undertakings that carry out asset management activities are required to report information that is not relevant about the investments that they manage.

Voluntary Reporting Standard

The Commission also released a draft of the voluntary reporting standard for companies not required to report under the CSRD. As noted in the Commission’s announcement, CSRD in-scope companies cannot require value chain partners with 1,000 or less employees to provide information beyond what is in the voluntary standard. The draft voluntary standard is based on EFRAG’s 2024 voluntary SME standard (VSME), which the Commission endorsed through a recommendation in 2025.

The Commission also published a Q&A on the value chain cap that explains how the voluntary reporting standard would function as part of the value chain cap. It also addresses specific questions to help stakeholders understand the value chain cap.

The Public Feedback Process

The Commission has launched a one‑month public feedback period on the draft final versions of the revised ESRS and the voluntary reporting standard.

The public feedback period is open until June 3. After that, the Commission will adopt the two delegated acts as soon as possible after the consultation ends. They will then be sent to the Parliament and Council for scrutiny under the no‑objection procedure (two months, extendable by a further two months) before entering into force.

The public feedback portal for the ESRS is here and the portal for the voluntary reporting standard is here.

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