Opinion on Draft Simplified European Sustainability Reporting Standards

The European Commission requested the European Union Agency for Fundamental Rights (FRA) to provide an opinion on the draft simplified European Sustainability Reporting Standards (ESRS) ahead of their adoption via delegated act. This opinion applies a risk-based human rights approach, grounded in the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, to assess whether the proposed simplifications preserve essential safeguards for people adversely affected by corporate activities. Conducting such a fundamental rights impact assessment of changes proposed by EFRAG benefits the simplification of reporting standards as it serves as a means to ensure that efficiency gains are achieved without compromising the protection of human rights or the quality of disclosures.

What changed / Why it matters for fundamental rights

The recent simplification of the ESRS aimed to ease the reporting burden on companies, particularly smaller entities, while seeking to retain the essential safeguards that underpin effective sustainability disclosure. The sustained focus on a human rights risk-based framework aligned with the approach articulated in the UNGPs is welcome for its potential to enhance focus and practicality. However, a more streamlined regime also carries risks, including the possibility of inconsistent application or reduced transparency where companies interpret materiality too narrowly.

The draft simplified ESRS introduce extensive reductions in mandatory data points, broaden the reliance on reliefs and phase ins, and increase the use of estimates and proxies in value chain reporting. Social metric reductions affect gender equality, non-employee transparency, work life balance, and occupational health and safety, while climate and pollution disclosures have become less prescriptive. These changes matter because they may render making severe or systemic human rights impacts less visible, particularly where they occur deep in value chains or affect marginalised groups. Moreover, simplifications in climate and pollution reporting may slow the detection of harms affecting fundamental rights to health, decent work, and a safe environment.

Scope of this opinion

This opinion focuses its analysis and conclusions on crosscutting standards (ESRS 1–2) and social standards (S1–S4) and includes certain targeted observations on environmental standards where these are relevant to rights protection. It identifies where deletions, restructuring, or new flexibilities may reduce the visibility of human rights impacts, weaken transparency, or create legal ambiguity—particularly for vulnerable groups. It offers a number of targeted suggestions to improve the simplified ESRS with proportionate safeguards aimed at ensuring the respect of human rights in a corporate context, such as strengthening double materiality assessment or restoration of key labour, gender and governance disclosures.