The Simplified ESRS and the DMA

The short version

The simplified ESRS preserve double materiality and the four-step DMA process. They introduce top-down mode for matters where the conclusion is clear, adopt fair presentation as the overarching reporting principle, allow DMA documentation to be carried forward between cycles, and remove the mandatory list of topics so undertakings report only on material sub-topics. Mandatory datapoints drop by 61 per cent; all voluntary disclosures go. Wave 1 filers reporting on FY2025 and FY2026 continue under the Quick-Fix Delegated Regulation until the simplified standards take effect.^[2]

1. Context: what EFRAG delivered in December 2025

EFRAG received its mandate from the Commission on 28 March 2025 as part of the Omnibus I simplification package. The brief was direct: reduce mandatory datapoints, clarify unclear positions, simplify materiality application, and enhance interoperability with the ISSB Standards.

EFRAG published exposure drafts on 31 July 2025 for a 60-day public consultation, then delivered final technical advice on 3 December 2025, based on more than 700 consultation responses and two field tests. EFRAG 3 Dec 2025 The draft simplified ESRS are now with the Commission, which will adopt a delegated act — expected in the first half of 2026 — giving the revised standards legal effect.^[1]

Importantly, the simplified ESRS do not replace EFRAG IG 1. The implementation guidance continues to apply, with IG 1 revisions expected in parallel with the simplified ESRS delegated act.

2. Top-down mode in more depth

The methodological shift most worth understanding is top-down mode. EFRAG’s December 2025 advice positions it not as a shortcut but as a recognition that for some sustainability matters, the materiality test has an obvious answer, and the reporting obligation is to document the reasoning rather than to generate quantitative scores confirming what is already established.^[1]

The key phrase in the guidance is “where the conclusion is clear.” For an integrated oil and gas producer, climate change is material. For a listed consumer brand with a public human-rights commitment, value-chain workers are material. Running an exhaustive bottom-up assessment to confirm these conclusions consumes resources that could deliver more stakeholder value elsewhere.

Top-down mode requires three conditions to be defensible:

• The matter is presumptively material given the undertaking’s sector and activities, or established by prior public commitments, or addressed by existing internal risk and sustainability management.
• The qualitative reasoning is documented and articulable to an auditor — written justification replaces the scoring trail.
• The choice of top-down over bottom-up is documented in IRO-1 narrative. Silent method selection is not compliant.

For matters where the answer is not clear — emerging topics, sector-specific exposures, stakeholder-raised concerns — bottom-up identification and scoring remain the appropriate methodology. Most Wave 1 practitioners are adopting a hybrid approach: top-down for headline matters, bottom-up for the assessment margin. Read our dedicated methodology comparison for deeper treatment.

3. Fair presentation: a quieter but consequential shift

Fair presentation is a term from IFRS accounting practice, applied to sustainability reporting for the first time in the simplified ESRS. It asks whether the sustainability statement, taken as a whole, faithfully represents the undertaking’s sustainability profile to a reasonable user.

The framing has three practical consequences. First, over-disclosure has a compliance cost. Under ESRS v1, Wave 1 filers routinely over-disclosed defensively; under fair presentation, immaterial content that obscures what matters is itself a compliance failing. Second, exclusions need equal rigour to inclusions. “Why did you include this?” and “why did you exclude that?” are equally demanding questions, with equal documentation expectations. Third, assurance scope clarifies. Auditors work with fair presentation routinely in financial contexts; applied to sustainability, the concept gives them a recognisable anchor for their review.

4. Carry-forward DMA documentation

Operationally the most consequential change. ESRS v1 was read by most practitioners as requiring annual full DMA re-runs. The simplified ESRS are explicit that DMA documentation may be carried forward between cycles, with interim re-runs triggered by defined conditions rather than the calendar.

Three conditions trigger a full re-run before the natural review point:

• Structural change. Major acquisition, divestment, or business model shift that materially alters the sustainability profile.
• Regulatory change. Significant revision to the ESRS framework or sector guidance affecting scope or methodology.
• Material new matter. Identification of a previously unconsidered IRO through stakeholder engagement or external events (major incident, litigation, regulatory enforcement).

The carry-forward provision is not licence to do nothing between full cycles. The undertaking maintains a living materiality register, monitors external and internal signals, and refreshes components where circumstances change. But the expectation of annual full re-scoring — which consumed significant portions of Wave 1 cycles — is gone.

5. What Wave 1 filers should do now

For Wave 1 undertakings already in cycle, the simplified ESRS arrive mid-stream. Three practical responses:

Do not pause. FY2025 and FY2026 cycles are governed by Delegated Regulation (EU) 2025/1416 — the Quick-Fix — which preserves current-ESRS compliance with no added requirements. Assessments completed under the original ESRS remain compliant; no retrospective revision is needed.^[3]

Adopt top-down mode selectively from FY2027. Begin preparing for the simplified methodology by identifying which currently bottom-up-assessed matters could credibly route to top-down. This is a documentation task — the qualitative reasoning must be articulated clearly before the formal transition.

Restructure the cycle plan. If annual full re-runs were built into the governance calendar, redesign around the carry-forward model. This affects committee review dates, internal audit plans, and stakeholder engagement windows.

Wave 2 and preparation-stage organisations have more room. The advice is to build the baseline on IG 1 — which will not change in its foundational elements — and to adopt the top-down and carry-forward elements as the delegated act finalises.

Foire aux questions