The New ESRS Exposure Drafts – What’s changing in ESRS 1 & 2

The revised ESRS Exposure Drafts (European Sustainability Reporting Standards) introduce significant changes in sustainability reporting. The goal: to make the standards clearer, leaner, and more practical.

The new ESRS Exposure Drafts are open for public consultation until September 29, 2025. Now is the right time for companies to familiarize themselves with the proposed changes.

This article provides a concise overview — structured around the general changes, and the key updates in ESRS 1 – General Requirements and ESRS 2 – General Disclosures.

Photo by Alexey Larionov

General Changes – A Clear Shift Towards Simplification

The overarching changes bring noticeable relief to companies:

• 57% reduction in mandatory datapoints.

• 55% reduction in total length of the standards.

• Introduction of “Fair Presentation” as a central principle – improving alignment with international standards like IFRS (International Financial Reporting Standards).

• ARs (Application Requirements) have been consolidated at the end of each chapter.

Companies now also enjoy greater flexibility in their reporting approach:

• The previously mandatory list of material topics (AR 16) has become an illustrative list in the new Appendix A.

• Sub-sub-topics have been entirely removed.

• Sector-specific standards are postponed for now.

Key Updates from ESRS 1 – General Requirements

ESRS 1 defines the fundamental principles for sustainability reporting. It has been significantly streamlined, with the following highlights:

• Double materiality with more flexibility:

  Companies may report material topics either at the level of IROs (Impacts, Risks & Opportunities) or at the topic level – whichever provides more relevant information.

  
  

• Focused over exhaustive analysis:

  A full analysis of the entire value chain is not required. A risk-based, reasonable approach is sufficient.

  
  

• Subsidiaries with low financial relevance:

  These can be excluded from sustainability reporting – unless they present material IROs for the group.

  
  

• Simplified treatment of value chain data:

  Companies may use estimates, industry proxies, or average values instead of collecting detailed partner data, without clear prefrence for the report.

  
  

• M&A flexibility:

  Reporting on acquisitions or disposals during the reporting year can be postponed to the next year – provided material IROs are disclosed.

Key Updates from ESRS 2 – General Disclosures

ESRS 2 defines cross-cutting disclosure requirements (Governance, Strategy, IROs). It has also been revised for clarity and simplicity:

• Removal of Appendix C requirements:

  Most detailed disclosures regarding governance and strategy are removed. A few exceptions remain (e.g., climate resilience).

  
  

• Aggregated disclosure is allowed:

  Companies can disclose KPIs, policies, targets, or actions once, as long as it’s clear which topics they relate to – cross-referencing is allowed.

  
  

• More content moved to the voluntary section:

  Datapoints such as board composition or risk management processes are now part of the Non-Mandatory Implementation Guidance (NMIG) – and therefore optional.

What Does This Mean for Your Business?

The new drafts deliver a clear message: less prescription, more accountability.

Companies can now design their reports in a more strategic, compact, and practical way — but they must make well-reasoned decisions.

Now is the time to:

• Rethink your double materiality approach

• Update your reporting structure

• Leverage new flexibility for streamlined reporting