EFRAG's revised ESRS exposure drafts: The middle market impact

What the revised ESRS Exposure Drafts mean for the middle market 

Sustainability reporting in the European Union is facing transformative change. With the European Financial Reporting Advisory Group’s (EFRAG) newly released revised European Sustainability Reporting Standards (ESRS) Exposure Drafts, organisations have an opportunity to benefit from simplified reporting requirements, while keeping the focus on the main goals of the EU’s sustainability agenda. Below, RSM outlines the essential aspects of these proposed changes and what they mean for middle-market businesses.

CSRD’s role in the EU’s sustainability landscape

The Corporate Sustainability Reporting Directive (CSRD) came into effect on 1 January 2023 as a key component of the European Green Deal, alongside the EU Taxonomy and the Corporate Sustainability Due Diligence Directive (CSDDD) (that is due for implementation in 2027). These directives collectively drive responsible business operations and direct capital towards sustainable outcomes.

Early implementation of the CSRD and ESRS highlighted significant complexity. In response, there has been broad support for reforms that would streamline requirements while upholding robust sustainability objectives.

The Omnibus package and EFRAG’s mandate

To address industry feedback, the European Commission introduced an “Omnibus package” in February 2025. This set of proposals is designed to refine and simplify the three pillars of the Green Deal, which include significant changes to the ESRS. EFRAG, entrusted with providing technical advice to the EU Commission, issued revised Exposure Drafts for all 12 ESRS standards on 31 July 2025, kicking off a crucial 60-day public consultation.

The package also includes supporting documents, such as a Basis for Conclusions, Log of Amendments, and practical examples, to enable stakeholder review and input.

Key revisions in the Exposure Drafts

EFRAG adopted both “top-down” and “bottom-up” approaches to reduce reporting complexity and help entities of all sizes comply more efficiently.

The six levers of simplification

1. Streamlined double materiality assessment

The Double Materiality Assessment (DMA) now follows a clarified “top-down” approach by starting from the analysis of the organisation’s business model. Evidence requirements are designed to be reasonable and proportionate, with more specific guidance on materiality thresholds.

2. Better readability and integration

The revised standards allow for easier comprehension and the option to offer executive summaries. Disclosures can be organised more flexibly using appendices, helping entities provide report users with relevant, accessible information. These changes should help companies to “tell their story” in a more coherent way.

3. Overhaul of minimum disclosure requirements

EFRAG reduced overlaps between ESRS 2 minimum disclosure requirements (MDRs) and the topical datapoints by refining and clarifying requirements for policies, actions, and targets, governance and strategy. This means less redundant reporting and a sharper focus on what is essential.

4. Enhanced clarity and accessibility

Voluntary disclosures have been removed, and clear boundaries now exist between what is mandatory and what is not. This resolves prior confusion about compliance.

5. Practical burden-reduction reliefs

New reliefs try to address reported concerns in a pragmatic manner, including for acquisitions, disposals, boundaries definitions, commercially sensitive information and data-gathering challenges. The introduction of “reasonable and supportable information” is better aligned with global standards.

6. Improved global alignment

Editorial and technical adjustments bring ESRS more in line with other reporting frameworks such as IFRS Sustainability Disclosure Standards and the Greenhouse Gas Protocol, supporting multinational businesses and standardising expectations across borders.

Bottom-up review and data point reduction

EFRAG’s bottom-up review, guided by industry feedback, resulted in a 57% decrease in mandatory data points and a 68% total reduction in disclosures in these proposed standards. The review focused on cutting excessive granularity and retaining only datapoints strictly necessary for achieving disclosure objectives. This shift both simplifies reporting and increases focus on meaningful, decision-useful sustainability information.

Impact for stakeholders

For new reporters:

Clearer guidance and lower complexity should ease initial compliance. The more straightforward DMA and extra guidance are especially beneficial for companies navigating sustainability reporting for the first time.

For existing reporters:

Although the overall burden is expected to fall, organisations with established sustainability processes must carefully assess and potentially update their systems to align with revised standards. In this context, listed entities that have already published their 2024 sustainability statements will also be able to benefit from an extension of the existing transitional measures.

For middle-market businesses:

Smaller organisations often lack resources for complex reporting. By reducing required data points and presenting options for streamlined reports, the new standards are expected to lower these barriers to compliance.

The public consultation process

The drafting period is accompanied by a structured 60-day public consultation, closing 29 September 2025. EFRAG’s online survey, which contains 30 targeted questions, allows respondents to focus feedback on areas that matter most to them. Detailed templates are available for those wishing to comment on specific paragraphs or technical elements.

After consultation, EFRAG will analyse the feedback and issue its final advice to the European Commission by 30 November 2025. This swift timeline is designed to support companies gearing up for the coming CSRD and ESRS deadlines.

RSM’s take on the ESRS changes

RSM welcomes EFRAG’s measured approach to simplifying the ESRS and appreciates the focus on both simplification and global alignment. The reduction of data points directly addresses the burdens faced by early adopters, and the clarified mandatory requirements give much-needed predictability for compliance efforts.

However, the breadth of these revisions presents challenges; stakeholders must thoroughly review proposed changes in a limited timeframe. Prioritising feedback on the most relevant standards will help organisations and the broader business community ensure that the final versions are both practical and robust. In particular, stakeholders should ensure that the steep reduction in reporting content does not prevent investors and broader stakeholders from obtaining the information that they consider necessary in their decision-making process.

Further alignment with international standards, such as the IFRS Sustainability Disclosure Standards and GHG Protocol, will benefit global organisations, foster consistency, and make it easier to meet multiple regulatory regimes without duplicative effort.

Preparing for the revised standards

Organisations should start now to get ready for the ESRS changes. We recommend:

• Assessing current processes: Carefully examine existing sustainability processes to see how they align with the revised drafts. Identify where adjustments or new controls will be necessary.
• For entities that will report for the first time, the new version of the ESRS is a good guide to start preparing for the main topics or the double materiality assessment
• Engaging with the consultation: Use the consultation phase to both understand changes in depth and influence final outcomes through constructive feedback.
• Building internal capabilities: Regardless of your current level of reporting, invest in training and process upgrades to build expertise in the new ESRS requirements.

Conclusion

EFRAG’s revised ESRS Exposure Drafts mark a watershed moment for sustainability reporting across the EU. The move towards simplification is a major step forward, aiming to make compliance feasible—even for smaller entities.

Stakeholder engagement will be critical to shaping fair, effective, and pragmatic standards. RSM encourages companies and organisations to participate actively in the consultation process. Your input not only informs EFRAG’s technical adjustments but also ensures that the final ESRS reflects practical business realities.

Although the consultation window is tight, it offers a crucial opportunity to help design standards that will shape European sustainability reporting for years to come. RSM is committed to guiding our clients through these changes, supporting them in achieving both regulatory compliance and lasting sustainability impact.

With these revisions to ESRS, organisations have an opportunity to proactively streamline sustainability reporting. RSM helps organisations address these changes head-on, ensuring businesses not only meet reporting requirements but also unlock further opportunities for growth, resilience, and stakeholder trust.