Draft delegated act released – significant modifications to European Sustainability Reporting Standards

On 9 June 2023, the European Commission published the draft delegated act along with the first set of European Sustainability Reporting Standards (ESRS). These revised ESRS propose changes to the original draft ESRS, including significant transitional relief.  

EFRAG had previously delivered a ‘first batch’ of ESRS to the EC in November 2022. Since then, the EC has consulted with numerous stakeholders, resulting in numerous modifications to the draft ESRS, aiming to ensure proportionality and the correct application of the standards.

The following is a brief summary of major modifications made by the EC from the original draft ESRS delivered in November 2022:




All standards and all disclosure requirements and data points will be subject to materiality assessment, with the exception of the disclosure requirements in ‘General disclosures’ ESRS 2.


In the previous draft ESRS, numerous disclosures and data points were required regardless of materiality if they related to information required by entities to meet certain EU laws (e.g. the Sustainable Finance Disclosure Regulation – SFDR).

Phasing-in of certain requirements

Undertakings or groups not exceeding 750 employees may omit:

  • Scope 3 greenhouse gas emissions in the first year
  • Social topical disclosures in: (1) ESRS S1 Own workforce for the first year; and (2) ESRS S2, S3 and S4 for the first two years
  • All disclosure requirements in ESRS E4 Biodiversity and ecosystems in the first two years


All undertakings or groups may:

  • Omit anticipated financial effects related to non-climate environmental standards (ESRS E2, E3, E4 and E5) in the first year
  • Omit certain own workforce disclosures (e.g. social protection, persons with disabilities, work-related ill-health, and work-life balance) in the first year
  • Provide qualitative disclosures in place of quantitative information concerning certain environmental disclosures for the first three years

Making certain disclosures voluntary

Certain disclosures that were proposed to be mandatory in the previous draft ESRS are now voluntary, including:

  • Biodiversity transition plans
  • Certain indicators about ‘non-employees’ in the undertaking’s workforce
  • Explanation of why the undertaking may consider a particular sustainability topic to not be material

Flexibility in certain disclosures

Certain disclosure requirements have greater flexibility, including:

  • The financial effects arising from sustainability risks and on engagement with stakeholders
  • Methodology used for materiality assessment
  • Modified datapoints on corruption, bribery and whistle-blowers that might have been considered to infringe on the right not to self-incriminate

Coherence with EU legal framework

Technical modifications to ensure better alignment with other provisions in the Accounting Directive and other relevant pieces of legislation (e.g. the Pay Transparency Directive).

Interoperability with global standard-setting initiatives

EFRAG and the EC have continued to engage with the International Sustainability Standards Board and the Global Reporting Initiative to increase the interoperability of ESRS, with further changes being made to the standards.

Editorial and presentational modifications

Editorial and presentation changes have been made to improve the standards' clarity, usability and coherence.


The EC invites feedback on the proposed requirements with the feedback period closing on 7 July 2023.

The draft delegated regulation and modified ESRS may be accessed on the European Commission’s website.

This article first appeared at https://www.bdo.global/en-gb/news/ifrs-news/draft-delegated-act-released-%E2%80%93-significant-modifications-to-european-sustainability-reporting-standa