AMF, the French Financial Markets Authority assessed a sample of ESRS statements published by French listed companies under the CSRD for financial year 2024.

This report is very valuable as it gives you information on what the financial marketplace is expecting from your sustainability reports. Below you will a summary of the key findings related to ESRS E1 Climate change.

We strongly recommend that you use the IRO E plan in Cleerit ESG to structure your information on E1 IROs, policies, actions and targets, before including these tables into the datapoints in the ESRS templates. We also recommend that you set up a specific governance model in Cleerit to structure and report on your transition plan by decarbonisation lever. This will ensure that you structure the information as expected by the financial market. Don’t hesitate to contact us if you need further guidance on this point.

E1 Transition plans

There is an overall improvement as compared to previous non-financial statements in terms of quality and comparability (use of denominations, consistency, etc.) which highlight the added value of the ESRS.

None of the transition plans (TPs) covered in the sample can be considered compliant with all ESRS data points.

Beyond the mere “tick-the-box” exercise, AMF assessed whether TPs manage to convey a sense of the broader undertaking’s strategy which is consistent throughout the report.

In this respect major difficulties are still present in the TPs’ building blocks:

• target-setting;
• decarbonisation levers;
• financial resources.

« Net-zero » targets and « GHG neutrality » claims (E1-7)

Some improvements are identified compared to previous non-financial statements: some companies deleted unclear claims from previous reports and show considerable efforts in adjusting to the ESRS framework (for example, the 90-95% reduction pathway with the possibility for justified sectoral variations, associated with a Net-Zero target).

However, there is still a lot of confusion with the use of the following concepts:

Net Zero claims, which are very popular (probably due to extensive use of SBTi external validation) are undermined by 3 types of breaches:

• Not respecting the 90-95% reduction ambition, in both absolute and gross value.
• Not covering the scope of GHG emissions, especially along the value chain (3 Scopes).
• Dealing with residual emissions (5-10%): disclosures tend to be succinct or inexistant. Some issuers explain that the action plans to neutralize residual emissions are not yet fully defined.

The use of GHG neutrality claims (although less common) also raises questions:

• Confusion with the net-zero claim (or transition plans).
• Lack of reporting associated with the claim: cf. the 3 items of §61 of E1-7 which are important to understand the consistency of the claim with E1-4 targets and their reliance on the use of carbon credits.

AMF recommends preserving the “net-zero” concept in the revised ESRS (with a minimum 90-95% GHG reduction pathway), which the ESRS has helped to strengthen, while clarifying some aspects such as the options available for residual emissions (carbon credits + removals) and the different types of removals (transfer of CO2).

AMF recommends clarifying the expectations around “carbon neutrality claims”: emission reductions vs use of carbon credits and removals; target-setting (all Scopes, etc.) – thereby clarify the interactions between the two notions. 

Reporting on GHG emissions reduction targets

A few surprising shortcomings with regards to clear ESRS expectations:

• Although rare, AMF still finds some targets set in intensity value for non-financial institutions. In this case, the associated absolute value is not always (clearly) displayed. For financial institutions, targets are usually set in intensity and sector-by-sector (except for fossil fuels).
• Gross value reporting: some undertakings are setting targets in net value (taking into account removals or credits), either explicitly (rare) or implicitly. In the latter case, the information on the use of carbon credits or removals is not easy to spot.

Overall, there seems to remain some confusion around the identification of actions that are eligible as GHG reduction levers under E1-4 compared to actions that should be excluded from these targets (carbon credits, removals, avoided emissions, cf. section on E1-7).

Some companies do not make a clear distinction between GHG emission reduction in their value chain (reported under E1-4) and emissions associated with carbon credits or removals (to be reported under E17) – they are netting these different types of emissions.

This is not compliant with the requirements in E1-4 to set targets in gross value, by excluding emissions associated with removals, carbon credits and avoided emissions.

Depending on the tool used, different reporting requirements are expected: E1-4 for very specific types of removals (transfer of CO2 into geological storage) vs E1-7 for other removal and carbon credits mechanisms.

Scope 3: undertakings could also be clearer on the consistency between the scope of their targets (E1-4) and their GHG inventory boundaries (E1-6) as climate targets are sometimes set on a limited number of Scope 3 categories.

For financial undertakings, AMF is still seeing significant differences in the scope of reporting from one financial institution to the other

More generally, climate reporting tends to lack explanations around the methodology used to set targets:

• Are they derived from a sectoral decarbonisation pathway?
• What are the underlying scenarios?
• Justification of the reference year; explanations on the consideration of future developments, etc.).

Good practice

Use of the “AR 48 table” that puts into perspective the GHG inventory (including Scope 3 Categories) with the entity’s targets. 

Decarbonisation levers

Qualitative description

Practices tend to be heterogenous with some companies displaying a simple list of items while others strive to be more granular (for instance, separating actions taken from actions planned for the future) and comply with MDR-A requirements [on actions] .

Overall, the latter [MDR-A] tend to be missing (time horizons, clear scope, expected outcomes…).

Financial resources allocated to the transition plan

Information on the nature and the amounts of CapEx/OpEx allocated to the transition plan is identified as the most difficult step to be taken by companies on transition planning.

This leads to various types of reporting practices (including good practices):

• Detailed reporting by lever, by type of expenditure (Human, CapEx, Opex) and for both planned and future resources across different time horizons
• Detailed reporting for part of the requirements (resources already planned)
• Aggregated reporting: a few overall figures (x billion in low-carbon overall actions)
• No quantitative reporting but with justifications: non-materiality or challenges to disentangle low carbon investments from general Capex
• No reporting at all on financial resources

AMF noticed very few elements of reconciliation between the resources associated with the transition plan (if any– see point above) and the financial statements.

Source: https://www.amf-france.org/sites/institutionnel/files/private/2025-10/amf_study_csrd_reporting_the_way_forward_2025.pdf

When you use Cleerit ESG to structure your E1 disclosures on transition plans, IROs and PATs you increase both ESRS compliance and organizational efficiency. Contact us if you are interested in learning more >>>.

AMF, the French Financial Markets Authority assessed a sample of ESRS statements published by French listed companies under the CSRD for financial year 2024.

This report is very valuable as it gives you information on what the financial marketplace is expecting from your sustainability reports. We will send you the information regrouped by subject. Below you will a summary of the key findings related to ESRS S1 Own workforce.

We strongly recommend that you use the IRO E/S/G plans in Cleerit to structure your information on IROs, policies, actions and targets, before including these tables into the datapoints in the ESRS templates. This will ensure that you structure the information as expected by the financial market. Don’t hesitate to contact us if you need further guidance on this point.

The AMF (Autorité des Marchés Financiers) regulates the French financial marketplace, its participants and the investment products distributed via the markets. It also ensures that investors are properly informed and is a driving force behind regulatory change at both European and international levels. As an independent public authority, it has regulatory powers and a substantial level of financial and managerial independence. To carry out their tasks, AMF is required to regulate, authorize, monitor and where necessary, inspect, investigate and enforce.

Overall comments on ESRS S1 Own workforce first-wave disclosures (FY 2024)

For social-related topics specific information on the DMA process is provided only in very rare cases, and information on input parameters (sources/assumptions) is often not specified.

Policies, actions and targets (PAT) disclosures are overly narrative and often lack the structure and precision needed for usability and comparability. This narrative-heavy approach results in lengthy but low-informational disclosures.

While some companies articulate the alignment clearly between PATs, and their explicit linkage to the material impacts, risks, and opportunities (IROs) identified during DMA, most disclosures remain siloed, preventing readers from understanding how corporate responses are tailored to material sustainability topics.

Many companies rely on general wording, high-level ambitions, or reaffirmations of principles (e.g. alignment with international frameworks or « commitment to diversity »), without operational details.

Good practices:

• Embedding the IRO-to-response logic systematically across S1 disclosures would enhance narrative coherence, reduce duplication, and reinforce alignment with the ESRS architecture.
• Using tables to summarize the expected outcomes, time horizons and progress of actions, provides clearer insight into how impacts are managed.

PATs – policies, actions and targets

Human rights and DEI policies are disclosed almost systematically, but often in very boilerplate terms, without explaining how international frameworks are translated into internal processes.

DEI-related disclosures sometimes omit a breakdown of the types of discrimination addressed.

Not all concretely explain how the effectiveness of policies is monitored (internal audit mechanisms, examples of corrective actions taken in response to policy breaches…), and only a small number explain how the effectiveness of actions is assessed over time.

Very few provide information on the financial or operational resources allocated to actions.

Companies still structuring their sustainability governance and processes likely lack the tools or processes to track and disclose the associated resources deployed, even for topics deemed material.

The quality and usefulness of targets vary widely. Only a few are precise and time-bound, while others are broad qualitative aspirations.

Only a minority report on progress year-over-year, or even indicate a reference value preventing stakeholders from assessing the effectiveness of the actions deployed.

Very few companies disclose changes to targets or metrics over time, thereby missing the opportunity to explain strategic reorientations or learning processes.

Nearly none of the companies provide evidence of engagement with workers or relevant stakeholders in the design or monitoring of targets, which calls into question the degree to which the targets reflect operational priorities or workforce realities. Where engagement is mentioned, it remains high-level and provides little information about the actual performance management process.

When companies do not set targets, they either don’t indicate it or mention the absence of a target without explaining the underlying reasons (e.g. lack of data, etc.).

Gender and age breakdown metrics are valued by investors, but the prevailing disclosure approach remains largely descriptive and non-analytical, often limited to high-level figures without commentary or interpretation.

Very few companies provide a breakdown by job function, a level of detail that helps identify potential imbalances – such as age concentration in lower-level positions or lack of age diversity in management roles.

In most cases, disclosures do not discuss how age diversity is monitored or linked to workforce planning or inclusion goals. This suggests a low level of maturity in how companies use this metric as a tool for organizational development.

Source: https://www.amf-france.org/sites/institutionnel/files/private/2025-10/amf_study_csrd_reporting_the_way_forward_2025.pdf

By using Cleerit ESG to structure your S1 disclosures on IROs and PATs you will increase both ESRS compliance and organizational efficiency. Contact us if you are interested in learning more >>>.

On October 1st, the European Securities and Markets Authority (ESMA) provided feedback on EFRAG’s consultation on its Exposure Draft on the revised European Sustainability Reporting Standards (ESRS). Here are some key take-aways on ESMA’s position:

Fair presentation principle

ESMA agrees with the proposed inclusion of the fair presentation principle and notes that introducing an explicit reference to fair presentation emphasizes the role of the qualitative characteristics of information and would require preparers to assess whether the disclosures in the sustainability statement are globally suitable to convey a fair presentation of the undertaking’s material sustainability-related IROs and how they are assessed and managed.

From the perspective of investor protection, a framework that better serves investors and other users of the sustainability statements is to be preferred compared to a framework that does not include such a feature or that – even worse – leaves room for ambiguity as to its nature.

This assessment and the associated assurance procedures would further ensure that the sustainability statement focuses on material information. From a practical perspective, the same approach is common practice in the financial reporting domain.

The fact that the first set of ESRS require undertakings to comply with all the elements of the fair presentation principle without making the principle itself explicit has led to divergence and uncertainty across the Union in the application of the first set of ESRS and, in particular, on the assurance of the resulting information.

Aggregation of information at topic-level vs IRO-level

ESMA is concerned that, in several instances, the draft proposes to change the focus of the disclosures from the Impacts, Risks and Opportunities (IROs) to the sustainability topics related to those IROs.

ESMA notes that a wide divergence could be observed [during 1st wave 2024 reporting] with regards to the level of disclosures provided by undertakings between some undertakings focusing on a granular list of IROs throughout the sustainability statement and others remaining at a higher level of aggregation, i.e. topic/sub-sub-topic level or sustainability matter.

ESMA highlights that information about sustainability-related IROs is at the heart of EU legislation.

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.

As the sustainability topics are not a perfect substitute for the IROs, the ESRS should make it clear that any aggregation of IROs should not result in obscuring information as to whether and how the material IROs are managed.

ESMA notes that the ESRS should be clear throughout the text that, in line with the CSRD, the information provided needs to enable an understanding of the IROs linked to sustainability matters and how an undertaking manages them.

Executive summary & appendices

While seeing merit in the idea of undertakings disclosing a concise introductory text to provide users with an unbiased summary of the main aspects disclosed in the sustainability statements. However, in ESMA’s view, the inclusion of an executive summary, even if only on an optional basis, would require some guidance to ensure that the information provided in the summary is prepared on the basis of a consistent logic across undertakings.

The ESRS should be clear that the use of appendices is primarily expected for any non-material information or for information required by other laws and regulations.

References to ESRS requirements within the sustainability statement

There should be a requirement to include a reference to the DRs addressed in the text of the sustainability statement and not only in content tables/index.

There could be several options to do so, e.g. in the title, subtitles, in the text of the paragraphs themselves.

This level of clarity would strike a better balance between a more flexible structure and comparability/readability of the sustainability statement.

Gross vs net assessment of impacts

ESMA believes that EFRAG should be clear in setting a core principle based on the gross approach and deal with any exceptions, application aspects, through specific guidance.

Financial effects from sustainability related risks & opportunities

EFRAG consulted on two options regarding disclosure of financial effects:

• Option 1 requires disclosure of qualitative and quantitative information, but it allows omitting quantitative information under certain conditions.
• Option 2 limits the requirement to qualitative information only, with a choice to report quantitative information on a voluntary basis.

ESMA does not support option 2 which departs from the IFRS S1 requirements and would deprive investors and other stakeholders of material information about an undertaking’s current and future ability to withstand sustainability-related risks with implications to their strategy and business model thereby increasing uncertainty for investors and cost of capital for undertakings.

ESMA agrees with the first option for the enhancement of the disclosures on anticipated financial effects (i.e. disclosure of quantitative information unless specific conditions are met) due to the critical importance that information on anticipated financial effects plays in decision making by investors.

In addition, ESMA recommends including guidance on how to calculate current financial effects in the standard. It should be clarified in the Application Requirements that the current financial effects are to be determined with consideration of the mitigation measures implemented (“net” basis).

ESMA also notes that Option 2 would be contrary to the need – as per the Commission’s mandate to EFRAG – to enhance rather than undermine the interoperability with international standards, most notably in this case the ISSB standards.

ESMA acknowledges that it can be expected that the disclosure of anticipated financial effects as currently required in ESRS Set 1 (i.e. quantitative information) may pose practical challenges, especially for topics beyond climate change.

As the preparation of this information may be complex and involve specific assessments, ESMA stresses that these disclosures already benefit from phase-in provisions which have been further prolonged and extended in scope by the recently adopted “Quick-fix” delegated act.

These additional time serves as preparation time for undertakings and ESMA considers that, if deemed necessary, such phase-in provisions could be extended within a reasonable timeframe for topics other than climate change.

In ESMA’s view, this would be a more balanced solution rather than foreseeing only qualitative disclosures on financial effects.

Furthermore, a number of reliefs on undue cost and efforts and measurement uncertainty are applicable to this disclosure.

Finally, ESMA notes that information on anticipated financial effects provides critical information especially for primary users of financial reports and this is also why such information was originally foreseen in the TCFD recommendations whose first publication dates back to 2017.

Undue cost or effort relief

ESMA disagrees with the proposed reliefs as currently drafted as they are unlimited in time, affect own operations and do not encourage the improvement of disclosures overtime.

The ESRS should support a learning curve, during which the data infrastructure is being built and other processes and internal controls are established, without compromising the quality of sustainability reporting in the long run.

ESMA notes that the proposed relief would discourage undertakings from building the necessary data infrastructure within its own operations, provide incentives for structuring opportunities, and discourage companies from making every effort to improve their disclosures over time.

ESMA therefore does not support this proposed relief, but it stresses the importance of EFRAG identifying more targeted and time-bound reliefs to ensure that any lack of information does not affect users of sustainability statements for a prolonged period of time.

Read the full feedback from ESMA here: https://www.esma.europa.eu/sites/default/files/2025-10/ESMA32-846262651-5289_ESRS_revision_ESMA_response_to_EFRAG_consultation.pdf

Monday 22/9, the Swedish Corporate Reporting Board hosted an outreach event with EFRAG to gather feedback on the ESRS simplification proposal. Approximately 50 people participated online, whereof a handful asked questions and/or gave feedback.

The goal was twofold: to clarify the upcoming changes and ensure Swedish stakeholders’ perspectives are heard.

Here are some key takeaways:

Overall, the Confederation of Swedish Enterprises (Svenskt Näringsliv) recognized EFRAG’s work as “a good step in the right direction”.

Insurance Sweden (Svensk Försäkring) shared that opinion but added that they were disappointed that the simplification did not go further, as “the weight of the datapoints is more important than the number”. They also expressed that although clarified, “DMA is still overly complex” and “should be more principle based”.

Insurance Sweden expressed support for the fair presentation concept, but in their opinion the current wording risks introducing a compliance mindset. Wording such as “information necessary for” is difficult to appreciate.

They also pointed out that auditors in different countries have different views. The fair presentation provision “is not a concern in Sweden but in the South of Europe it seems to be”. They suggested clarifying the wording to stress “the overarching principle-based framework to avoid information overload”.

The Confederation of Swedish Enterprises added that “it is the management’s view of fair presentation that is important”, depending on their stakeholders.

There was also a suggestion not to publish a non-mandatory implementation (NMIG) at all and “leave it up to the market” to determine practices, as larger companies will lead the way.

The gross vs net issue does not seem to be a big issue in Sweden. The need to preserve comparability was stressed, with the suggestion to keep just one mandatory method, gross evaluation with an option for net evaluation, and move the appendix C to the non-mandatory implementation guidance (NMIG). “Verifying remaining impacts is difficult, and it is challenging to define when a net approach is appropriate.”

Regarding the two options for disclosure of anticipated financial effects, the Confederation of Swedish Enterprises prefer option 2 (only qualitative) over option 1 (qualitative/quantitative), but “option 3 to remove financial evaluation of risks and opportunities altogether” (both qualitative and quantitative) is their most preferred option “from a reliability point of view”.

Insurance Sweden also prefer option 2 with only qualitative information, stating that “it is more balanced and realistic” as it recognizes “practical and legal risks” as well as audit complexities. Sensitive data is particular difficult to report and can give a false impression. To ensure interoperability with IFRS-SS, financial data could be subject to voluntary disclosure.

As part of the ESRS simplification process, the French Accounting Standards Authority (ANC) organized an outreach session on September 12th between French stakeholders and EFRAG on the ESRS simplification proposal published on July 31st.

The objective was to better understand the issues and changes underway, and to ensure the voice of French stakeholders was heard by EFRAG.

Representatives of preparers and auditors attended in person at the Ministry of Economy and Finance in Paris, and approximately 80 participated remotely. Patrick de Cambourg, Chair of EFRAG’s Sustainability Reporting Board (EFRAG SRB), was also present in person.

The session began with an introduction by Patrick de Cambourg, who explained, among other things, that the ESRS simplification proposal was a combination of two policy priorities: (1) reducing administrative burden and (2) ensuring high-quality sustainability reporting.

6 Simplification Levers

EFRAG has implemented six simplification levers:

1. Simplification of the double materiality assessment – including the assessment process and documentation for audit purposes.
2. Increased readability/conciseness of sustainability statements – improved flexibility in organizing information, including the ability to add an executive summary and use annexes, and a focus on how the company manages its sustainability topics and the interconnectedness of the disclosed information (Topics-IROs-Policies-Actions-Targets-Metrics relationships).
3. Relationship between minimum disclosure requirements (formerly MDRs, now GDRs) and topical standards – removal of most of the detailed narrative requirements in the topical standards in favor of general requirements for policies, actions, targets, and metrics (GDRs), including for the G1 standard.
4. Understanding, clarity, and accessibility of the ESRS standards – shortened text, voluntary publications eliminated, language clarified, several concepts simplified, and several data points moved to a separate non-binding implementation guidance (NMIG) document intended as a guide for reference purposes only.
5. Cross-functional burden-reducing reliefs – new flexibilities and reliefs have been introduced, including the avoidance of undue costs or effort.
6. Enhanced interoperability with global reporting standards – particularly with the ISSB IFRS S1 & S2.

Patrick de Cambourg clarified that the number of data points in itself is important but should not be an obsession, as it depends on the context and how they are counted (publishing comparative data, for example, automatically doubles the number). The data point reduction methodology applied by EFRAG consisted in:

• Removing the least relevant data points, defined as those not necessary to achieve the objectives of the disclosure requirement (DR).
• A less prescriptive, or rules-based, approach, and a more principles-based approach (cf. rules-based standards, such as US GAAP, vs. principles-based standards).
• Removing narrative requirements for policies, actions and targets (PAT) from topical standards, in favor of general requirements for policies, actions, targets and metrics (GDR), including for the G1 standard.

EFRAG clarified that merging two data points was not counted as a reduction.

Some data points have also moved from voluntary to mandatory:

• Water – total withdrawals from own operations (E3)
• Total discharges from own operations (E3)
• Biodiversity transition plan summary, but only if a plan has already been made public (E4)
• Procurement team training on business conduct (G1)
• Confirmed business-related incidents (numbers and nature) (G1)

And four have been added:

• Declaration of compliance with ESRS 1 (ESRS 2 BP 1)
• Secondary microplastics (clarification) (E2)
• % or weight of materials considered critical and strategic (E5)
• % or weight of waste with unknown destination (E5)

The result of this work is a 68% reduction in the total number of data points, which includes a 100% reduction in voluntary data points and a 57% reduction in mandatory data points.

The discussions that followed this introduction were of high quality, and were impressed to hear how familiar these groups and large French companies are with the ESRS standards, how they have had detailed discussions with their auditors, and how thoroughly they had studied the implications of the proposed simplifications.

Listening to them, it struck us that the gap is widening between these first-wave companies (in countries that have successfully transposed the CSRD on time and in a compliant manner), and the second-wave companies and those that will be subject to voluntary compliance, on these highly strategic issues for Europe and its companies.

Waiting and not preparing will not be good for business! When second-wave companies enter the stage, these first-wave companies will be publishing their 4^th report.

Overall, the participants praised the proposed simplifications and the work carried out by EFRAG within very tight deadlines.

Here is a summary of some of the comments and discussions that followed.

On the Double Materiality Assessement (DMA)

Gross vs Net assessment

The discussions focused on the issue of gross versus net assessment. The general opinion was in favor of assessing gross IROs (sustainability impacts, risks, and opportunities), except for actual impacts where successfully implemented measures should be allowed to be taken into account.

However, the table in Appendix C of ESRS 1 could be too detailed and create confusion. EFRAG wanted to be precise because this is a difficult topic that has generated much debate.

Patrick de Cambourg clarified that it is important to maintain momentum in addressing impacts, that it is important to report on how the company has taken these impacts into account, and that this is rewarding for the company.

A large company added that it is important not to have to consider everything that could possibly happen in absolute terms, but to focus on what is relevant to the company. (On this point I add that it is for this same reason that the future financial effects have been renamed “anticipated” instead of “potential” already in the current ESRS.)

Frequency of the DMA

A request was made to further clarify the required frequency of DMAs.

Patrick de Cambourg clarified that a comprehensive DMA should likely take place every 3-5 years, with updates needed in the interim to account for any changing circumstances.

Positive impacts

A representative asked a question about reporting on the management of negative impacts, particularly when the measures implemented create additional positive value beyond simple corrective action.

Patrick de Cambourg explained that when the standards were developed, the primary focus was on managing value destruction first, but that it would undoubtedly also be necessary to focus on value creation.

We can move beyond managing the negative to creating additional positive value, especially in the social sphere. A sustainability statement should not be punitive, we must also address the positive when appropriate.

On the structure and clarity of the proposed standards

Incorporation by reference

There is a considerable reluctance regarding incorporation by reference, which is used primarily for strategy and governance aspects, and which can cloud the overall picture and compromise the readability of the report.

Patrick de Cambourg clarified that it is not widely used in France, but that Northern Europe is very supportive of it.

EFRAG reasoned as it does for financial statements, where incorporation by reference is rarely used. The ANC chairman also clarified that statements should be sufficient and “form a whole.”

Connectivity between financial and sustainability information

“Too complicated, we’re not mature enough, we’ve been told that a lot. So, we’ve reduced the connectivity between the sustainability statement and the financial statement.”

But Patrick de Cambourg also insisted that the line between the two must not be blurred, and that sustainability information should not be included in the financial statement. This is one of the objectives of the CSRD.

NMIG – Non Mandatory Implementation Guidance

Many detailed data points, particularly narrative ones, have been moved from the standard itself to a so-called “NMIG” document, with non-mandatory guidance.

EFRAG will propose that this document not be part of the ESRS delegated act, which would allow it to be maintained and updated as experience is gained.

On this point, companies have expressed concerns, stating that a guidance document quickly becomes almost mandatory in discussions with auditors, especially when it is published by EFRAG.

Won’t they become de facto mandatory? Ambiguities lead to lengthy discussions with auditors and different approaches between companies, which hinders comparability.

One representative proposed deleting the NMIG document altogether.

Patrick de Cambourg clarified that the hierarchy of standards must be respected: if it’s not in the document, it’s not mandatory.

But in a field as complex and pioneering as sustainability reporting, there needs to be direction and guidance. Questions will be asked. Interpretation should not be left to auditors. Not having guidance means pushing interpretation into the dark while we try to standardize and standardize. Creating a vacuum isn’t necessarily helpful to businesses.

On ESRS being a fair presentation framework

The less prescriptive, less rules-based approach of the proposed ESRS standards allows companies more flexibility, but relies on the exercise of judgment, which is the basis of the duty to provide a fair presentation of sustainability information.

This de facto increases the responsibility of companies, and by extension, of their auditors. Representatives expressed their concerns and said that companies are not reassured.

Patrick de Cambourg clarified that the responsibility for judgment already lies in ESRS Set 1 and the CSRD. Advancing common sense necessarily implies judgment.

Fair presentation is derived from the CSRD (particularly the qualitative characteristics). In reporting, there are only two types of frameworks: compliance or fair presentation—EFRAG has made explicit something that was already implicit.

One representative suggested that the principle of fair presentation might need to evolve to better integrate this new non-financial area of ​​application.

On the reliefs

Without undue cost or effort

How can we understand and apply this cross-cutting relief so that we all have the same interpretation? And where do we draw the line between the reliefs and faithful presentation?

Representatives also pointed out that the term “significant” is widely used in the standards, which deserves clarification to avoid endless discussions with auditors.

Patrick de Cambourg responded that the maturity of financial reporting has taken decades to develop, and that this is not yet the case for sustainability information.

The application of the relief will need to be judged on the basis of evidence; the goal is not to exonerate companies. And the link between the relief and the concept of faithful presentation will undoubtedly need to be better presented.

Anticipated financial effects from risks and opportunities

Opinions on the two options presented for reporting on anticipated financial effects (ESRS 2 SBM-3 and E1-11) were divided.

• Option 1 requires the disclosure of both qualitative and quantitative information, but allows for the exclusion of certain quantitative information under certain conditions. It is substantially aligned with the IFRS relief, but specifies that the company may use it when there is no reasonable and justifiable information from its business plans that can serve as a basis for calculating the anticipated long-term financial effects.
• Option 2 limits the requirement to qualitative information only and allows companies to choose to disclose qualitative information voluntarily, without having to meet any conditions.

Unsurprisingly, companies opted for Option 2, specifying that the information would not achieve the required quality and raises liability issues given the uncertainties of the future and confidentiality issues. Even if there are reliefs, “we’re sending the message that the company should be able to do it.”

Auditors and the financial market opted ​​for option 1. “We need to understand the company’s risks and opportunities, we need to have quantitative evidence on these issues, otherwise the markets will operate in the dark. And there are many reliefs, particularly the ‘without undue costs or effort’ relief. The anticipated financial effects are in any case essential for financial materiality and for connectivity with the financial statements.”

Patrick de Cambourg concluded that we know the difficulties, but views are divided. The requirement will push for maturity; we must push for maturity through effort. It is not good for the transparency and fluidity of the markets to leave this information to bilateral relations (between banks and companies, for example).

One representative proposed making information mandatory for climate-related issues, and optional for other issues.

On financial institutions

Patrick de Cambourg pointed out that the financial sector has very specific characteristics. In the absence of sector-specific standards—and there are sectors that really need them—it becomes “entity-specific,” requiring coordination within the sector, which is not always easy.

In particular, there were discussions around the issue of measuring GHG emissions in absolute terms or in terms of intensity.

One representative clarified that it is irrelevant for a bank to define reduction targets (linked to the value chain) in absolute terms “because it is precisely the high-emitting companies today that need the most investment—banks are intended to finance all economic sectors, including those in transition.”

It was added that the ECB—the central bank of European Union countries using the euro—measures in terms of intensity.

Intensity indicators have been removed from the proposed simplified ESRS standards.

Other comments on metrics

The metrics were not discussed in detail, but two comments were made at the end of the session:

• not having an adjusted indicator for the gender pay gap does not provide enough information
• and a minimum wage is not necessarily adequate.

Disclaimer

The content of this publication reflects CLEERIT’s current understanding. This information does not replace information provided by official, administrative, or governing authorities. The information contained in this publication is subject to change, correction, or addition without notice. While every effort has been made to ensure that the information contained in this publication is accurate and complete, inaccuracies may exist. CLEERIT accepts no liability for any loss or damage that may arise in connection with the use of the information contained in this publication.

A DEEP-DIVE INTO THE ESRS SIMPLIFICATION PROPOSAL DATED JULY 31, 2025

On July 31^st, EFRAG proposed a simplified set of ESRS, drastically reducing datapoints while retaining the core objectives of the EU Green Deal.

This proposal is now open for public consultation until 29 September 2025. The revised ESRS drafts and the consultation survey are available here: https://www.efrag.org/en/amended-esrs-0

A deep-dive into the ESRS simplification proposal gives a clear indication of the likely future of EU sustainability reporting – which it’s here to stay.

It also highlights lessons learned from FY 2024 1^st wave reporting, which did not always meet expectations, and gives us the keys to produce relevant, useful and compliant sustainability statements for FY 2025 and beyond.

The purpose of the enclosed document is to provide you with an insight into the proposed simplified set of ESRS, including EFRAG’s feedback from 1^st wave reporting, to prepare for high-quality ESRS reporting.

We hope that it will be useful both for 1^st wave companies preparing the FY25 report and for 2^nd wave companies setting up a sustainability governance system to prepare for the FY27 report.

Here are some of our key takeaways from EFRAG’s ESRS simplification proposal (you will find further detailed in the full document):

Reduced by over 50% but still CSRD-compliant and retaining the core objectives of the EU Green Deal – how is this possible? 

The overall length of the standards has been shortened by over 55% and the number of mandatory datapoints have been cut by 57%.

Yet the core content of the expected information necessary to fulfil CSRD obligations and the EU Green Deal objectives is still more or less intact. How is this possible?

A less prescriptive approach – increased management responsibility

First, EFRAG has proposed a less prescriptive approach with reduced granularity for narrative disclosures.

The objective of what the user of the report needs to understand from a specific disclosure is clearly spelled out, and from the application requirements (AR) and non-mandatory implementation guidance (NMIG) we learn what content should or could be expected from such a disclosure.

The standards then leave it up to management to include the relevant information – while complying with the required qualitative characteristics (complete, neutral, accurate, concise, comparable, verifiable …) and the materiality of information criteria (decision-usefulness, understanding of material IROs…).

While this provides more flexibility, the addition of the fair presentation requirement makes it crystal clear that management is responsible for the information it provides to the market.

Indeed, the standards implicitly acknowledge that to achieve fair presentation of the information, it may be necessary for management to provide disclosures beyond those specifically required by the standards.

Streamlined and focused, with less overlaps and duplications

Second, the standards have been streamlined, with less overlaps and duplications.

They are now structured around the standardization of the description of the core content across all topics, and sub-topics when relevant:

→ IROs, policies, targets, actions and metrics (with narrative context for both ESRS metrics and entity-specific metrics).

A paragraph has been added to explicitly clarify that fairly presenting material IROs is the objective of ESRS sustainability reporting. (ESRS 1, par 3)

The standards also clarify that information is material and needs to be included when (ESRS 1, par. 21):

(a) omitting, misstating or obscuring that information could reasonably be expected to influence decisions that primary users of general-purpose financial reports make based on those reports, including financial statements and the sustainability statement; or

(b) it is necessary for users of general-purpose sustainability statements to understand the undertaking’s material impacts, risks and opportunities [IROs] and how it identifies and manages them [with policies, actions, targets and metrics].

We need to report on a given topic when the topic relates to one or more material IROs, as identified through the double materiality assessment. (ESRS 1, par. 22)

The description of the material IROs shall make it explicit which policies, actions and targets relate to which material IROs. (ESRS 1, par. 113)

So, identifying IROs, incl where and how they arise throughout the entire value chain, through a compliant double materiality assessment, and explaining how material IROs are managed with clear reference to connected policies, actions, targets and metrics, as a basis for a robust sustainability governance, is still very much the focus of the simplified ESRS.

But, acknowledging that we are still in a learning curve and building new capabilities, reliefs have been including to allow for reporting with information available at the reporting date “without undue cost or effort”, while requiring transparency and the disclosure of the actions taken to increase coverage and quality in future reporting periods, and the progress compared to the previous reporting period. (ESRS 1, par. 87 and 91)

Lessons learned from FY24 1^st wave reporting – what did we do wrong? 

Reading EFRAG’s Log_of_Amendments files gives many valuable insights into what was not reported as expected by FY 2024 1^st wave preparers.

Irrelevant ‘boilerplate’ disclosure

One thing that stands out across the log files is the repeated mention to avoid ‘boilerplate’ disclosure with standardized, generic information irrelevant for understanding company-specific IROs, processes and circumstances.

Comments on boilerplate and irrelevant disclosure are found throughout the log files, just to cite some examples:

• …such as information describing in detail that the company applied the criteria outlined in ESRS 1 and/or followed the recommended DMA process (ESRS 1, 26).
• Added to clarify that an undertaking shall report relevant information and avoid boilerplate (ESRS 2, AR28).
• Deleted – boilerplate disclosure and redundant (interviews and public survey) (current ESRS 2 DP 48f/g and 45c).
• Added – to foster more connected and relevant information (ESRS 2, AR24).

And it is now even spelled out in a new application requirement (ESRS 2, AR28):

“The information should, wherever possible, be specific to the reporting period and avoid generic descriptions except where necessary to enable an understanding of the undertaking’s current approach to manage its material [IROs].

When reporting on policies, actions and targets, the undertaking shall report relevant information, avoiding information that is boilerplate, and therefore not relevant for users, for example when policies and actions have been implemented to comply with law and regulation, or when the necessary information is already provided in … SBM-1.”

Lack of connections and context

Not connecting IROs, policies, actions, targets and metrics, and not providing enough information on the connections between material IROs and strategy, business model, value chain and resilience, are perhaps amongst the most important misunderstandings during the 1^st wave FY24 reporting (together with the net vs gross issue which we cover in the full document).

Disclosure requirements and datapoints have been clarified to correct this (for example, ESRS 1, par. 113, ESRS 2 IRO-2 and SBM-3):

“The undertaking shall make explicit which policies, actions and targets relate to which material [IROs]” (ESRS 1, par. 113)

Misunderstanding the concept of positive impact

The meaning of positive impact has also been frequently misunderstood, so clarifications have been added to correct this (ESRS 1, par.  36):

The undertaking’s positive impacts shall be assessed in their own right and shall not be netted off against its negative impacts.

The results of the undertaking’s mitigation or remediation actions on negative impacts caused by or contributed to by its compliance with law and regulation are not positive impacts.

However, if its business activities, products and services mitigate or remediate negative impacts of another party, this is considered a positive impact of the undertaking.

Reference to “philanthropy” was considered by EFRAG but discarded. Only impacts that derive from business activities, products and services qualify as positive impacts to be reported (log file ESRS 1).

Cherry-picking and overstating positive information

And a word of caution from EFRAG regarding the new possibility to add an executive summary at the beginning of the statement (log files ESRS 1, par. 109):

The introduction of an “Executive Summary” would allow to provide key messages compatible with the investor communications.

While implementing this option, it is important to respect the qualitative characteristics of information, such as to avoid reporting mainly positive information in the executive summary and leaving the negative ones in the detailed parts.

These words echo those that ESMA (the European Securities and Markets Authority) published on July 1st addressing greenwashing risks in support of sustainable investments, reminding market participants about their responsibility to make claims only to the extent that they are clear, fair and not misleading:

• Sustainability claims should fairly and accurately represent the entity’s sustainability profile, without exaggeration and avoiding falsehoods.
• Claims should be precise and be based on all relevant positive and negative aspects.
• Omission and cherry-picking should be avoided.
• Claims should steer clear of vagueness and excessive references to irrelevant or non-binding information.

Disclosing on sustainability performance is the new normal 

Engaging with affected stakeholders through ongoing sustainability due diligence (ESRS 1, par. AR11), as well as establishing robust risk management and internal controls processes and systems for sustainability reporting, is critical to materiality assessment and contributes to the consistency of financial and sustainability reporting (ESRS 1, par. AR16).

We are entering a new era, where only material information is allowed in the sustainability statement (except in specific cases described in ESRS 1, par. 107-8), and where omitting, misstating or obscuring material information comes with both legal and reputational risks.

Sustainability professionals, finance, compliance, internal control, HR and management need to work together to future-proof sustainability governance and reporting practices to meet these new market expectations, safe-guard stakeholder trust and ensure continued access to sustainable finance.

Deep-diving into the ESRS simplification proposal is helpful if you are searching for the keys to produce relevant, useful and compliant sustainability statements for FY 2025 and beyond.

We hope you enjoy the reading!

And don’t hesitate to get in touch if you would like a personalized presentation and/or guidance to set up relevant sustainability governance and reporting processes and system.

 

#CSRD, #ESRS, #ESG, #Strategy, #Governance, #SustainabilityReporting, #Digitalisation, #CleeritESG

 

Disclaimer

The content of this publication reflects CLEERIT’s current understanding. This information does not replace information provided by EFRAG nor by other official, administrative, or governing authorities. The information contained in this publication is subject to change, correction, or addition without notice. While every effort has been made to ensure that the information contained in this publication is accurate and complete, inaccuracies may exist. CLEERIT accepts no liability for any loss or damage that may arise in connection with the use of the information contained in this publication.

© Cleerit August 25, 2025

Du finner en svensk översättning nedan

The European Financial Reporting Advisory Group (EFRAG) has proposed a simplified set of European Sustainability Reporting Standards (ESRS).

The objective: make sustainability reporting under the CSRD more manageable while preserving its relevance and alignment with the European Green Deal.

In the proposal,

• Mandatory datapoints (to be reported if material) have been cut by 57%.
• The full set of disclosures—mandatory and voluntary— have been reduced by 68%.
• The overall length of the standards has been shortened by over 55%.

In part, this has been achieved by taking datapoints out of the core standards and moving them to a non-mandatory implementation guidance section.

This eliminates excessive mandatory granularity by effectively adopting a more principle-based standard setting approach, leaving more flexibility for companies (but potentially less specific and useful disclosures for the report users).

Patrick de Cambourg, Chair of the EFRAG Sustainability Reporting Board, wrote:

“Capitalising on effective experience, this is about making ESRS a more workable reality—so that sustainability reporting supports, rather than hinders, resilience, investment, and long-term value creation.”

EFRAG focused on cutting complexity and improving usability, drawing upon over 800 survey responses and stakeholder engagements.

This includes:

• streamlining the Double Materiality Assessment,
• reducing overlaps across standards,
• clarifying language and structure,
• removing all voluntary disclosures,
• introduction of new relief mechanisms, such as exemptions where reporting would cause undue cost or effort.

A 60-day public consultation has been launched, from 31 July to 29 September 2025, inviting stakeholders—including preparers, auditors, civil society, investors, and national authorities—to review and provide feedback on the revised drafts.

⭕ Access the draft standards and have your say here: https://www.efrag.org/en/amended-esrs-0

EFRAG will organise or co-organise outreach events throughout September and October, gathering further feedback ahead of its final technical advice to the European Commission, due by 30 November 2025.

In parallel, EFRAG performs a cost benefit analysis and targeted field tests which are also open to participation from stakeholders.

Future Steps 👉

• Final Drafts: Expected by November 30, 2025.
• Commission Adoption: Anticipated in 2026.
• Implementation Timeline: Revised ESRS will not apply to the fiscal year 2025.

We will analyze the changes proposed in these simplified versions and share our findings with you. And of course, we will remain at your side to help you adopt these new versions, once they are finalized and come into effect.

Thank you for your trust!

—SWEDISH VERSION—

Den europeiska rådgivande gruppen för finansiell rapportering (EFRAG) har föreslagit en förenklad uppsättning europeiska standarder för hållbarhetsrapportering (ESRS).

Målet: att göra hållbarhetsrapporteringen enligt CSRD mer hanterbar samtidigt som dess relevans och överensstämmelse med den europeiska gröna given bevaras.

I förslaget har:

• Obligatoriska datapunkter (som ska rapporteras om de är väsentliga) minskats med 57 %.

• Hela uppsättningen upplysningar – obligatoriska och frivilliga –minskats med 68 %.

• Standardernas totala längd förkortats med över 55 %.

Detta har delvis uppnåtts genom att datapunkter tagits bort från kärnstandarderna och flyttats till ett icke-obligatoriskt avsnitt med implementeringsvägledning.

Detta eliminerar överdriven obligatorisk granularitet genom att effektivt anta en mer principbaserad standardiseringsmetod, vilket ger mer flexibilitet för företagen (men potentiellt mindre specifika och användbara upplysningar för rapportanvändarna).

Patrick de Cambourg, ordförande för EFRAG:s styrelse för hållbarhetsrapportering, skrev:

“Genom att dra nytta av effektiv erfarenhet handlar detta om att göra ESRS till en mer praktisk verklighet – så att hållbarhetsrapportering stöder, snarare än hindrar, motståndskraft, investeringar och långsiktigt värdeskapande.”

EFRAG fokuserade på att minska komplexiteten och förbättra användbarheten, med hjälp av över 800 enkätsvar och intressentengagemang.

Detta inkluderar:

• effektivisering av den dubbla väsentlighetsbedömningen,

• minskning av överlappningar mellan standarder,

• förtydligande av språk och struktur,

• borttagande av alla frivilliga upplysningar,

• införande av nya lättnadsmekanismer, såsom undantag där rapportering skulle orsaka orimliga kostnader eller ansträngningar.

Ett 60-dagars offentligt samråd har inletts, från 31 juli till 29 september 2025, där intressenter – inklusive förberedare, revisorer, civilsamhället, investerare och nationella myndigheter – bjuds in att granska och ge feedback på de reviderade utkasten.

⭕ Ni hittar utkastet till standarder och kan ge feedback här: https://www.efrag.org/en/amended-esrs-0

EFRAG kommer att organisera eller samorganisera utåtriktade evenemang under september och oktober för att samla in ytterligare feedback inför sitt slutgiltiga tekniska råd till Europeiska kommissionen, som ska lämnas senast den 30 november 2025.

Parallellt utför EFRAG en kostnads-nyttoanalys och riktade fälttester som också är öppna för deltagande från intressenter.

Framtida steg 👉

• Slutgiltiga utkast: Förväntas senast den 30 november 2025.
• Antagande av kommissionen: Förväntas 2026.
• Tidslinje för implementering: Reviderade ESRS kommer inte att tillämpas för räkenskapsåret 2025.

Vi kommer att analysera de ändringar som föreslås i dessa förenklade versioner och dela våra slutsatser med er. Och naturligtvis kommer vi att finnas vid er sida för att hjälpa er att anta dessa nya versioner, när de är färdigställda och trätt i kraft.

Tack för ditt förtroende!