In simplified ESRS IRO management has taken center stage
On October 1st ESMA wrote that “the objective of the sustainability statement is not to report on a sustainability topic related to material IROs, but rather to provide material information on the material IROs which pertain to different topical areas”.
And that the “logic of the overarching structure of the ESRS” is “the description of the IROs and of how they are managed through policies, actions and targets”.
From EFRAG’s basis for conclusions we learn that:
⭕ The connectivity between IROs and PATs has been clarified and emphasized
The objective of the sustainability statement, taken as whole, is to present fairly all the business’s sustainability-related material impacts, risks and opportunities (IROs) and how the business manages them through policies, actions, targets and metrics (PATMs), and thereby manages (or not) the related material sustainability topics.
The embedded logic of the ESRS therefore calls for identification of material IROs and disclosure of PATMs – or their absence – for the related sustainability topic.
Companies can now use a tabular format for presenting the material IROs and PATs and also specify the list of material topics for which there are no PATs.
ESRS no longer require disclosure of reasons for not having PATs or plans and timeline to implement them.
The text now also clarifies that the description of material IROs may be presented alongside information on PATM.
Value chain information presented in SBM-1 remains essential for understanding and linking IROs within a sustainability statement.
⭕ General Disclosure Requirements (GDR) for PATs
The overlaps that existed between MDRs (now GDRs) for PATs on the one hand, and topical mandatory datapoints, on the other, have been addressed with the following:
- “Minimum” Disclosure Requirements (MDR) have been renamed “General” Disclosure Requirements (GDR), reflecting the fact that they are the reference point for the required information to be disclosed for PATs across all topical Standards.
- There are no (or very limited) other PAT datapoints in the topical Standards.
⭕ Level of aggregation disclosures related to IRO management
ESRS now clarifies the possibility to disclose PATM information at different levels of aggregation, reflecting factors such as the nature of the IROs or the way the business manages them, as well as the level at which significant variations of material IROs arise.
A specification has been also added in case of adoption of PATs but only for certain aspects (of a topic).
⭕ AMF, the regulator of the French financial market, also wrote:
A common structural gap across policies, actions and targets (PAT) is their lack of explicit linkage to the material impacts, risks, and opportunities (IROs) identified through the materiality assessment.
While some companies articulate this alignment clearly, most disclosures remain siloed, preventing readers from understanding how corporate responses are tailored to material sustainability topics.
Embedding this IRO-to-response logic systematically across disclosures would enhance narrative coherence, reduce duplication, and reinforce alignment with the ESRS architecture.
Sources:
https://www.efrag.org/sites/default/files/media/document/2025-12/Draft_Amended_ESRS_Basis_for_Conclusions_2025_December.pdf
https://www.esma.europa.eu/sites/default/files/2025-10/ESMA32-846262651-5289_ESRS_revision_ESMA_response_to_EFRAG_consultation.pdf (paragraph 35 and 77)
Page 56 in https://www.amf-france.org/sites/institutionnel/files/private/2025-10/amf_study_csrd_reporting_the_way_forward_2025.pdf