EU Plans to Simplify Corporate Sustainability Reporting Standards

Over the years, regulations and frameworks on corporate sustainability reporting have emerged to address the need to mainstream more responsible business conduct. As the world’s crises accelerate, participation from private sectors becomes more urgent. Thus, ensuring that these standards can adjust to the needs on the ground is important. In this light, the European Union plans on adjusting standards to simplify sustainability reporting.

Sustainability Reporting in the EU

Beyond economic gains, business activities affect social and environmental aspects in numerous ways. Sustainability reporting demands transparency by reporting social and environmental risks and impacts from their businesses. In short, it is a way to seek accountability from corporations. Thus, regulations and frameworks have appeared at international, regional, and national levels to accommodate different purposes and needs.

In 2022, the European Commission adopted the Corporate Sustainability Reporting Directive (CSRD). CSRD requires large companies and listed companies to publish regular reports on the social and environmental risks and impacts. The directive came into force in 2023, the same year the EU adopted the European Sustainability Reporting Standards (ESRS) to be used by companies under the obligations to the CSRD.

The ESRS covers climate change, biodiversity, human rights, and other environmental, social, and governance (ESG) issues. The Commission also made a point of interoperability with international reporting standards, such as the ones by ISSB and GRI, to prevent double reporting by companies.

Simplifying Standards

Three years after the directive for corporate sustainability reporting, the European Commission announced the plan to simplify the reporting standards. Under the Omnibus I initiative, the Commission aims to reduce unnecessary bureaucracy and streamline rules for citizens and businesses.

The initiative focuses the largest companies, which potentially have the biggest impacts. It aims to create a favorable environment for them to grow and attract support for their sustainability initiatives. At the same time, it also strives to ensure that these obligations do not burden smaller companies. One of the measures taken is amending the reporting standards (ESRS) to become more manageable while still aligning with the region’s sustainability objectives.

The amendment draft, proposed by the European Financial Reporting Advisory Group (EFRAG), cuts down the ESRS by over 55%. Notable changes include streamlining the double materiality assessment, reducing standard overlaps, and clarifying language and structures. The amendment would also remove all voluntary disclosures and introduce new relief mechanisms. The public consultation for the proposed draft runs from 31 July to 29 September 2025.

Ensuring Effective and Efficient Reporting

While the simplification of the ESRS aims to encourage bigger participation and easier implementation, concern arises over the implications and risks of such a big modification.

“Through these modifications, there is a significant risk that regulations will end up less coherent and comprehensible, with a focus placed on cutting down text and obligations rather than on increased correspondence between laws, and the development of guidance and tools to assist economic actors in the successful implementation of EU regulation,” said Mariana Ferreira, Sustainable Finance Policy Officer at WWF EU.

The European Commission will need to ensure a proper amendment and adoption process to achieve its intended goal of boosting economic growth and sustainability participation in the EU.

Kresentia Madina

Reporter at Green Network Asia | Website | + posts

Madina is the Assistant Manager of Stakeholder Engagement at Green Network Asia. She holds a bachelor’s degree in English Studies from Universitas Indonesia. As part of the GNA In-House Team, she supports the organization's multi-stakeholder engagement across international organizations, governments, businesses, civil society, and grassroots communities through digital publications, events, capacity building, and research.