EFRAG simplification 2

EFRAG is working to make corporate sustainability reporting simpler and, in some cases, clearer and more relevant.

I’ve had the opportunity to go through the proposed new ESRS 2 and ESG standards. Again, this is not a comprehensive overview but some points which I found interesting.

Less granular approach to narrative disclosures

I like this change, as I like the narrative side of the reports.

Options for the disclosure of anticipated financial effects

I’m not sure about this one. The sustainability report is supposed to complement the financial report, but the problem is that quantifying financial effects is not easy. There is a lack of mature methodologies as well as concerns from some companies about disclosing commercially sensitive information. EFRAG has specifically asked for feedback on this, and I am interested to see what preparers and users think.

More focused reporting

Good; some of the previous language was too vague and all-encompassing.

Flexible approach to granularity and in terms of the level of aggregation

Note this does not apply everywhere, but it does add some power back to the report writer.

Voluntary datapoints are deleted

At first glance, the deleted datapoints were not uniform. For instance, I saw very little cut from the beginning of E1 Climate Change, but quite a bit from E2 Pollution. I began to carefully list and count the deleted datapoints, but there is still a lot of ambiguity.

Clarity between direct data and estimates

Another good change; I use many estimates for VSME reports for small businesses.

Public consultation

EFRAG has a questionnaire for preparers and users to give feedback on the proposed changes. The deadline for submission is 29 September 2025.

Want to talk green?

I can help you to stay compliant with changing sustainability reporting requirements, communicate what’s important, and find added value in the process.

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