Navigating ESRS Reporting in 2025: Key Insights from EFRAG's New Portal and Simplification Efforts
The EFRAG Portal: A Glimpse into Early ESRS Implementation
The "EFRAG 2025 State of Play" portal stands as a live, interactive platform, meticulously designed to provide crucial insights from EFRAG's market study on the initial adoption of ESRS under the CSRD. Its core functionalities include a "Statistics Dashboard," which allows users to explore overall trends and metrics derived from 656 sustainability statements issued in 2025, and a "Report Repository," offering access to the complete set of analyzed company reports collected between January 1 and April 20, 2025. Complementing these interactive features, an accompanying "State of Play 2025" report is also available in PDF format, summarizing the statistics and offering key observations.
This portal serves as a critical tool for a diverse range of stakeholders. For preparers, it offers an opportunity to benchmark their own reporting practices against peers, identifying areas where improvements can be made. For investors, civil society organizations, and consumers, the portal significantly enhances transparency and comparability, enabling a more informed evaluation of companies' sustainability performance and associated risks. This directly addresses the historical "accountability gap" where reported sustainability information was often insufficient, difficult to compare, and lacked reliability.
Key Findings from the "State of Play 2025" Report
EFRAG's comprehensive analysis of the first 656 sustainability statements offers crucial insights into the initial phase of ESRS implementation:
Materiality Coverage: A significant finding from the report is the varied application of the double materiality principle. Only 10% of the analyzed companies identified all 10 topical ESRS standards as material. The most frequently disclosed topical standards were Climate Change (E1), Own Workforce (S1), and Business Conduct (G1). The data further reveals that more than half (52%) of preparers disclosed between 4 and 6 material topical standards, while approximately 25% reported 4 or fewer.
Stakeholder Engagement Gaps: The study uncovered a notable disparity in stakeholder engagement during materiality assessments. A vast majority, 97%, of companies involved internal stakeholders, primarily employees. However, engagement with broader societal stakeholders, such as authorities, Non-Governmental Organizations (NGOs), Industry Unions and Academia, remained considerably less common. This contrast between high internal engagement and low broader societal stakeholder involvement in materiality assessments highlights a significant area for improvement in operationalizing the "impact materiality" aspect of double materiality.
Climate Transition Plans: The report indicates that 55% of companies disclosed a climate transition plan, indicating that initial reporting on this topic is ongoing. However, a key observation is the variation in approaches and formats for these plans, highlighting different levels of maturity. Encouragingly, approximately 70% of preparers reported having near-term (2030 or earlier) Scope 1 & 2 targets compatible with the 1.5°C global warming limit. However, the absence of similar data for Scope 3 emissions (often the largest portion of emissions for many companies) suggests a potential reporting challenge or a less mature area of focus. This indicates that while companies are setting targets, the specific methodologies for achieving and reporting on these targets are still developing, posing challenges for stakeholders seeking actionable insights into climate resilience.
Reporting Depth and Length: The sustainability statements analyzed varied widely in length, ranging from 70 to over 200 pages on average. Financial institutions, in particular, tended to produce longer reports.
Underreported Topics: The study identified specific areas with limited disclosures. Topics such as biodiversity (E4) and internal carbon pricing showed restricted reporting. Furthermore, human rights incidents were rarely reported, even when other social data was present. The consistent underreporting of these topics points to inherent complexities in data collection, measurement, and materiality assessment within these areas. Unlike climate change, which has more established methodologies and frameworks, topics like biodiversity and human rights often involve more qualitative data, require specialized expertise, or necessitate deeper engagement across extended value chains.
Recommendations
Given the dynamic and evolving landscape of ESRS, companies subject to these regulations should adopt a proactive and strategic approach to their sustainability reporting.
Revisit and Refine Materiality Assessments: Companies should embrace the simplified, top-down Double Materiality Assessment (DMA) approach, focusing on identifying truly material impacts, risks, and opportunities relevant to their specific business model, rather than attempting to report on every single data point. A critical area for improvement, as identified in the "State of Play" report, is strengthening engagement with broader societal stakeholders beyond internal teams to ensure a comprehensive understanding of impact materiality. This will lead to more relevant and credible disclosures.
Streamline Report Structure and Content: Preparers should anticipate and prepare to incorporate an executive summary at the beginning of their sustainability statement to highlight key strategy, metrics, and future outlook upfront. To enhance readability and conciseness, consider relocating detailed or highly technical data, such as EU Taxonomy disclosures, to dedicated appendices. The focus should be on presenting core, decision-useful information in the main body of the report, avoiding over-reporting on non-material or voluntary disclosures unless there is a clear strategic benefit.
Optimize Data Collection and Management: Companies should leverage the new flexibility regarding value chain data. Where direct data from smaller suppliers is not feasible or disproportionately costly, preparers should be ready to use robust estimates or industry data, ensuring transparency in their methodology. Investing in comprehensive data management systems is crucial for accurately tracking ESG performance across complex operations and supply chains. Furthermore, it is advisable to prioritize improving data collection and reporting for currently underreported topics like biodiversity and human rights incidents, as these areas are likely to remain subjects of significant regulatory and stakeholder scrutiny.
Stay Engaged with Regulatory Developments: Active participation in public consultations, such as EFRAG's upcoming consultation (expected from late July to early September 2025), offers a valuable opportunity to influence the final standards and voice practical concerns. Continuous monitoring of legislative updates is also essential, particularly concerning the finalization of the simplified ESRS by October 2025 and their anticipated adoption by mid-2026.
Embrace Interoperability: For multinational companies, aligning internal data collection and reporting processes with both ESRS and ISSB standards is a strategic imperative. This approach can significantly reduce duplication of effort and enhance the global comparability of sustainability disclosures, providing a more consistent narrative to a global audience.
The launch of EFRAG's ESRS Statistics and Report Portal provides great insights into the early implementation of ESRS, revealing both significant progress and areas requiring further refinement.
As the ESRS framework evolves towards a more principles-based and materiality-driven approach, companies are presented with a unique opportunity to move beyond mere compliance. By strategically adapting their reporting processes, focusing on decision-useful information, and embracing the spirit of transparency, businesses can not only meet their regulatory obligations but also unlock new avenues for value creation, enhance stakeholder trust, and contribute meaningfully to a more sustainable economy. The future of sustainability disclosure is one of continuous improvement, informed by real-world data and driven by a shared commitment to accountability and positive impact.