Our take on the ESRS latest revisions

As the ESRS framework develops, it’s time to review the latest revisions.

EFRAG published the amended ESRS in July 2025, introducing several changes to mandatory data points and the double materiality assessment (DMA) process. While we welcome these changes as a positive step toward clarity and consistency, there remain key areas that need to be refined before the Omnibus is finalised.

Along with various other stakeholders, we provided technical advice on the ESRS draft on 29 September 2025. Here’s a rundown of our feedback.

Where we agree 

1. Executive summaries: the ESRS allows companies to include an executive summary at the start of their sustainability statements. This means preparers can highlight their most critical sustainability issues in a concise, strategic overview, improving readability and linking these directly to financial performance.

2. Targeted reliefs are pragmatic: EFRAG has introduced several burden reliefs, such as flexibility on value chain metrics, the option to use estimates rather than only direct data, and clearer guidance on how to handle acquisitions and disposals. Specifically, companies are allowed to exclude recently acquired or disposed entities from their reported data for a limited period, recognising the practical difficulties of integrating or separating sustainability information during these transitions. These amendments acknowledge the challenges companies face when gathering high-quality data.

3. Country-level employee reporting: ESRS S1 shifts the threshold for country-level workforce disclosures from a percentage-based rule to the top ten largest countries by headcount. This means companies will provide insights into their most significant employment geographies without having to disclose small or immaterial country-level data.

4. Biodiversity targets: the guidance for biodiversity-related targets has been streamlined but also updated to better align with science-based frameworks such as the Science Based Targets Network (SBTN). This keeps ESRS in line with global best practices and helps preparers avoid setting outdated or incomplete targets.

Where we partially agree

1. Fair presentation principle: the ESRS explicitly frames sustainability reporting as a fair presentation framework, aligning it with IFRS S1 and S2. This change is intended to reduce “checklist” behaviour by emphasising judgement and relevance. While we agree in principle, we only partially support this amendment because the guidance on how to operationalise “fair presentation” remains vague. This lack of clarity may lead to increased legal risk and audit costs because assurance providers lack validation criteria.

2. Undue cost or effort principle: Aligning with the ISSB standards, EFRAG introduced the undue cost or effort principle, where companies can omit certain data where collecting it would be burdensome. We partially agree, as it adds useful flexibility, but without clear limits, enforcement or guidance on how auditors will assess its use, it could weaken comparability and transparency across entities.

3. Interoperability with global standards: EFRAG has taken steps to position ESRS with IFRS S1 and S2, such as aligning GHG emissions boundaries and adopting many ISSB reliefs. However, reporting requirements for complex ownership structures are ambiguous. While interoperability has improved, inconsistencies remain that risk confusing preparers and weakening global comparability.

Where we disagree

1. Materiality assessment: EFRAG has revised the double materiality assessment (DMA) by introducing a combined bottom-up/top-down approach and adding “systemic risk” as a factor, while also updating guidance on aggregation and disaggregation. In practice, this means companies are asked to consider more factors without receiving clear guidance on when or how to update their assessments. 

2. Gross vs net impacts: the ESRS clarifies how remediation, mitigation and prevention actions should be considered by requiring companies to assess both gross and net impacts. While the aim is comparability, the requirement to always report gross impacts risks divergent interpretations regarding past, present and future remediation actions.

3. Disclosure on remedy targets and actions: EFRAG has scrapped the requirement to disclose key actions to provide or cooperate in remedies for those harmed by material impacts, and the requirements to disclose planned policies, actions and timelines for all material topics. This change means reports will contain fewer details on how companies intend to respond to identified issues, undermining the materiality assessment and removing crucial information that stakeholders rely on to evaluate corporate responsibility.

4. Absolute GHG emission targets: ESRS E1 raises the possibility of exempting financial institutions from disclosing absolute GHG emission targets when they have only set intensity targets. Intensity-only targets can mask real-world increases in emissions. Absolute targets are essential for transparency and accountability in the financial sector’s role in climate transition.