EFRAG launches a public consultation on ESRS Set 1

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On February 26, 2025, EFRAG published the proposals of the Omnibus package, and shortly after received a mandate from the European Commission to develop a technical opinion on the revision of the ESRS (European Sustainability Reporting Standards). The aim is to review and simplify Set 1, the section that defines the general requirements of sustainability standards. The opinion must be delivered by October 31, 2025, and will form the technical basis for the adoption of a new delegated act. EFRAG has therefore launched a public consultation aimed at stakeholders, preparers, reviewers, and users, to collect specific feedback on issues and possible improvements.

One of the key points subject to consultation concerns the materiality assessment, the process through which companies define which sustainability issues are relevant to their activities. According to initial feedback, the information requested is excessively detailed and often leads to a disproportionate exposure of impacts, risks and opportunities (IROs), with an informational load that is difficult to manage and not aligned with the real materiality of the issues. The Omnibus identifies this aspect as critical and suggests modifying the relevance criteria to make them clearer. The consultation therefore invites proposals for solutions to optimize the materiality assessment, reducing its complexity and ensuring that only truly significant information is communicated. In this perspective, simplification should not reduce transparency, but improve the quality of the reporting, avoiding the dispersion of resources.

Narrative information plays a central role in sustainability reporting, describing aspects such as governance, strategy, business model, policies, actions, and targets (PATs). However, the high level of prescriptiveness of mandatory datapoints (“shall”) required in Set 1 makes it difficult for companies to balance informational quality, comparability, and operational burdens. Stakeholders indicate that the excessive amount of narrative requirements compromises the effectiveness of reporting and reduces its usability by end users. For this reason, the EFRAG consultation proposes to make narrative information optional or eliminate it, promoting greater editorial flexibility and more efficient communication. The goal is to increase the fair representation of business practices while maintaining a methodological consistency among different sustainability reports at the European level.

The quantitative metrics, fundamental for comparing environmental, social, and governance performance over time and between companies, are also being reviewed. Initial findings suggest that many metrics are overly detailed, difficult to compile, or of limited decision-making utility. Additionally, datapoints related to EU regulations such as the SFDR, the Climate Law, and Article 8 of the Taxonomy Regulation have been integrated, complicating the reporting process further and increasing the informational volume without a specific assessment of their relevance. The consultation invites suggestions on which datapoints are critical in terms of relevance, preparation, or understanding, aiming to provide insights for streamlining the informational framework. The ultimate goal is to make data clearer, proportionate to the goals of the Green Deal and consistent with the objectives of the general sustainability reporting.

Another critical issue concerns the overall structure of the standards. According to stakeholders, the current form of reporting requirements is often complex and redundant, with duplications that hinder the readability and efficiency of the reports. Moreover, in a context of increasing globalization, it is essential that the ESRS are interoperable with other international frameworks, such as the ISSB (International Sustainability Standards Board). Set 1 has already been drafted with this in mind, but the Omnibus proposals aim to further strengthen the convergence between European and global standards, avoiding regulatory overlaps and facilitating application by transnational companies. Stakeholders are invited to propose solutions to improve the structure of the standards, eliminate repetitions, and enhance interoperability, contributing to making the ESRS a truly functional tool for the European sustainable transition.

This article was created as part of the "Biodiversity services EU expansion" project (CUP: E43D22000480009) under the Lombardy Region call "PR FESR 2021-2027 – LINEA INTERNAZIONALIZZAZIONE 21-27", aimed at supporting the internationalization of Italian companies. 3Bee is the naturetech company that develops innovative technologies for monitoring, protecting, and regenerating biodiversity, supporting businesses in defining personalized climate strategies based on the analysis of their impacts and dependencies on nature. With a solid portfolio in Italy, Germany, and France and significant partnerships, 3Bee continues its expansion in international markets to create a concrete impact through technology.