EU Cuts Sustainability Reporting Datapoints by Over 70% in ESRS Overhaul

The European Commission has adopted revised European sustainability reporting standards that sharply reduce the disclosure load on companies, alongside a new voluntary standard for smaller firms. The changes cut the number of mandatory datapoints companies must report by more than 60 percent and the total number by more than 70 percent, moves the Commission expects to lower reporting costs by over 30 percent per company. The overhaul forms part of the Omnibus I simplification package, the EU's wider effort to streamline sustainability rules and reduce the number of businesses caught by the Corporate Sustainability Reporting Directive.

 

What the Revised Standards Change

 

The revised standards, known as ESRS, cover environmental, social and governance issues including climate change, biodiversity and human rights, and exist to give investors and other stakeholders a view of the sustainability risks a company faces and the impact it has on people and the environment. The Commission describes the new versions as shorter and clearer, with added flexibilities and streamlined processes intended to make compliance less onerous without removing the substance investors rely on.

The scale of the reduction is the headline. Cutting mandatory datapoints by more than 60 percent is a substantial pruning of what companies are required to disclose, and the projected cost saving of more than 30 percent per firm exceeds the Commission's own target of reducing reporting burdens by 25 percent. The revisions drew on technical advice from EFRAG, shaped by stakeholder input and a public consultation through 2025, followed by a further call for feedback this spring.

 

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The Simplification-Versus-Disclosure Tension

 

The central question hanging over the overhaul is whether disclosure quality survives the cuts. The Commission has framed the exercise as reducing administrative burden while maintaining high-quality disclosures, and insists the adjustments are targeted so as not to undermine the directive's policy objectives. That framing acknowledges the balance it is trying to strike between easing costs for business and preserving the information that makes the reporting regime useful in the first place.

That tension sits at the heart of the broader Omnibus programme, which has drawn both support and criticism. Businesses have argued the original CSRD requirements were excessively complex and costly, particularly for the volume of datapoints involved, while investor and sustainability groups have warned that stripping back disclosure risks weakening the comparable data that climate and social risk analysis depends on. Cutting more than 70 percent of total datapoints is a significant move in that debate, and whether the remaining disclosures still deliver decision-grade information will be the test of whether the Commission has struck the balance it claims.

 

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A New Standard and a Cap for Smaller Firms

 

Alongside the ESRS revisions, the Commission adopted a voluntary reporting standard aimed at companies outside the scope of the CSRD. It provides a single, proportionate framework these smaller firms can use to respond to requests for sustainability information from large financial institutions and corporate customers, giving them a common reference rather than a patchwork of bespoke demands.

The standard also introduces a value-chain cap, a provision preventing companies subject to the CSRD from demanding more information from firms in their supply chains than the voluntary standard covers. That cap addresses a persistent complaint that large-company reporting obligations cascade down onto smaller suppliers who lack the resources to meet them, a dynamic that has made supply-chain disclosure a particular pressure point. By limiting what can be required, the measure is designed to keep the reporting burden from spreading indefinitely down the chain.

The delegated acts covering both the revised ESRS and the voluntary standard now pass to the European Parliament and the Council for a scrutiny period of two months, which can be extended by a further two. The measures take effect once that period ends. How Parliament and the Council respond, and whether the streamlined standards preserve enough disclosure to satisfy investors while genuinely easing the load on business, will determine whether this overhaul settles the long-running argument over the EU's sustainability reporting regime or reopens it.

 

Source: The European Commission