Why ESRS 2 matters
ESRS 2 is the backbone of the European Sustainability Reporting Standards, setting out the essential structure and content for sustainability statements under the Corporate Sustainability Reporting Directive (CSRD). The revised ESRS 2 delivers major simplifications—reducing the number of required datapoints, streamlining governance and strategy disclosures, and making reporting more flexible for organisations of all sizes.
By integrating stakeholder feedback, ESRS 2 helps companies focus on what truly matters: material impacts, risks, and opportunities (IROs) that shape long-term value creation. The new guidelines also aligns more with the VSME, ensuring that sustainability reporting remains practical and proportionate, even for smaller businesses.
For organisations navigating the evolving landscape of sustainability regulation, ESRS 2 provides a clear, actionable framework to build trust, demonstrate resilience, and drive positive change across the value chain.
Key Simplifications in ESRS 2
Governance (GOV)
Fewer data points overall: ESRS 2 reduces the reporting burden, with a 49% reduction in datapoints and a 34% reduction in word count.
GOV-2 merged into GOV-1: Information on how sustainability is addressed by the administrative, management, and supervisory bodies is now integrated into GOV-1, streamlining governance disclosures.
Remuneration metric retained: Still required for administrative, management, and supervisory body members.
Simplified due diligence: Focuses on the steps in the due diligence process for your material sustainability topics.
Basis for Preparation (BP)
More focused: Guidance now centers on specific circumstances, such as time horizons and scope of consolidation.
Phasing-in rules unchanged: No changes to the timeline for implementation.
Strategy & Business Model (SBM)
SBM-1: Emphasizes the main features and position in the value chain. Details on key activities and relationships are now non-mandatory guidance.
SBM-2: Focuses on key stakeholders, with organizational details and outcomes moved to guidance.
SBM-3: Requires linking material impacts, risks, and opportunities (IROs) to strategy and business model. Resilience can be demonstrated qualitatively; quantitative analysis is no longer required.
Anticipated financial effects: Two options are proposed:
Option 1: Quantitative first (qualitative if not feasible)
Option 2: Qualitative first (quantitative optional)
Materiality (IRO)
IRO-1: Provides a clearer method for describing the process to identify and assess material impacts, risks, and opportunities, with additional guidance on input parameters and stakeholder engagement.
IRO-2: Only the results need to be shown. Reporting can be by topic or by IRO, and a list of disclosures and EU datapoints must be kept.
General Disclosure Requirements (GDR)
Policies, Actions, Targets, Metrics: “Minimum” requirements are now called “General” Disclosure Requirements.
Policies, actions, targets (PAT): Less detail required, with clearer rules.
Targets: Qualitative targets are allowed, with links to ecological thresholds.
Metrics: Proxies are permitted, and external validation is not required.
Flexible reporting: Information can be grouped by topic or cross-referenced.
For a full overview of the general requirements and key simplifications introduced in ESRS 1 read or other insight.
