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  • Opinion on Draft Simplified European Sustainability Reporting Standards
FRA, 2026
25
February
2026

Opinion on Draft Simplified European Sustainability Reporting Standards

Environmental and social sustainability
Climate change and environmental protection
Consumer protection
This FRA Opinion on the draft simplified European Sustainability Reporting Standards informs the European Commission ahead of the standards’ adoption. This Opinion applies a risk-based human rights approach to assess whether the proposed simplifications preserve essential safeguards for people adversely affected by corporate activities. The Opinion provides practical, proportionate suggestions to strengthen the simplified framework and ensure that efficiency gains do not come at the expense of fundamental rights.
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  • Preamble
  • Executive summary
  • Abbreviations
  • 1. Introduction
    • 1.1. Scope of the analysis
    • 1.2. Legal and policy context
    • 1.3. Why it matters for fundamental rights?
  • 2. Cross-cutting Standards
    • 2.1. ESRS 1 – General Requirements
    • 2.2. ESRS 2 – General Disclosures
  • 3. Social Standards
    • 3.1. Cross-cutting
    • 3.2. S1 – Own Workforce
    • 3.3. S2 – Workers in the Value Chain, S3 – Affected Communities, and S4 – Consumers and End-users
  • 4. Environmental Standards
  • About this publication


3. Social Standards


3.1. Cross-cutting


  1. The Social Standards have been substantially revised in the simplified ESRS, with reductions in data points driven by the various simplification levers applied across the ESRS framework. In line with the double materiality assessment, Social Standards are reported only if material (see Definition: double materiality). Where they are not, paragraph 30 of ESRS 1 applies – requiring that ‘when a material impact, risk or opportunity concerns a sub-topic, the undertaking shall report only the material information for that sub-topic concerned’ [48] Except for certain elements in S1. See Draft simplified ESRS – S1, par. 1.
    . The revision redefines the link between ESRS 2 (now ‘General Disclosure Requirements’) and the topical standards, centralising common disclosures in ESRS 2 and removing most cross references.
  2. The simplified ESRS also separate binding provisions from guidance, removing voluntary disclosures from all ESRS. These voluntary disclosures have been either deleted or, if considered appropriate, moved to Non-Mandatory Implementation Guidance (NMIG). Coupled with the general deletion of contextual information and repeated information, and the deletion of certain ARs (e.g. where key terms and concepts like discrimination, human rights incident, grievance mechanism and remedy/remediation have been moved to the glossary), this contributes to the overall reduction in data points and word count.

Human rights impact and legal analysis

  1. The structural changes centralising former DRs SX-1 to SX-4 in ESRS 2 favour ‘more concise, less duplicative and more effective reporting’ and promote a ‘more principle-based reporting framework’ [49] EFRAG, Basis for conclusions – Draft amended ESRSBasis for Conclusions: Draft amended ESRS – December 2025, Brussels, 2025, p. 22, paragraphs 99 and 100.
    . While still aligned with the UNGPs, which urge companies to publicly commit to respecting human rights as a foundation for due diligence [50] UNGP 15.
    , this approach carries the overall risk of losing granularity and detail on the identification and assessment of impacts and policy commitments related to specific stakeholder groups, as explicitly recognised by EFRAG [51] EFRAG, Basis for conclusions – Draft amended ESRSBasis for Conclusion: Draft amended ESRS – December 2025, Brussels, 2025, p. 93, paragraph 457.
    . The combined effect of centralising disclosures and reframing human rights as a cross-cutting theme may therefore dilute topic-specific accountability: it risks transforming human rights from a set of concrete, traceable obligations into a general issue dispersed throughout the reporting framework, thereby weakening transparency and accountability regarding how different rights are affected. The combination of principle-based GDRs, reduced ARs and reliance on company self-assessment creates a heightened risk that undertakings could deem entire social standards (S1–S4) ‘non-material’ based on high-level desktop analysis, without meaningful stakeholder engagement or due diligence. This potential behaviour warrants close monitoring and, where available, should be assessed against emerging empirical findings or consultation feedback to determine its prevalence and inform preventive measures. This could see systematic under-reporting of structural risks (e.g. modern slavery, indigenous rights) that affect vulnerable groups but may not appear ‘material’ under issuer-centric assessments. In this context, ‘structural risks’ refer to persistent, systemic patterns of harm (e.g. discrimination, exclusion and power imbalances within supply chains) that stem from underlying social or institutional structures, as opposed to isolated incidents. These risks are often obscured when materiality is assessed solely through financial or enterprise‑centric lenses.
  2. The removal of DRs related to ESRS 2 SBM-3 – “Material impacts, risks and opportunities and their interaction with strategy and business model – from each social standard results in a regrettable loss of relevant information on specific stakeholder groups – such as the particular subgroup(s) impacted, the coverage of the impact or other contextual details. For example, for workers in the value chain, undertakings are no longer required to disclose geographies or commodities where there is a significant risk of child labour [52] 2023 ESRS, paragraph 11b.
    . Moreover, this substantial reduction, including of the ARs, means that the ESRS provide less guidance to undertakings on conducting due diligence and targeting specific groups [53] Danish Institute for Human Rights, ‘The revised European sustainability reporting standards are here, now it’s time to shift attention back ensuring to their meaningful implementation’, Danish Institute for Human Rights website, 3 December 2025.
    . Consequently, this downgrades the level of ambition in meeting the objectives of the UNGPs and OECD Guidelines, and may translate into weaker protection for vulnerable groups.
  3. The merger of previous DRs on stakeholder engagement procedures (SX-2) and procedures for remediation and grievance channels (SX-3) into a single, combined DR aims to reflect their connection and reduce duplication. This diverges from the UNGPs approach, which clearly distinguishes stakeholder engagement procedures from grievance mechanisms and remediation procedures as distinct operational requirements (UNGPs 18, 22 and 29–31). These fulfil distinct and complementary functions under the UNGPs – stakeholder engagement is aimed at prevention, whereas grievance mechanisms enable early identification of harm and remediation addresses adverse impacts. While grouping these aspects under one heading may seem an abstract issue, for stakeholder engagement it risks conflating consultation with complaints processes or suggesting that the former is required only in the context of the latter. This merger entails the risk that undertakings treat engagement as remedial only, rather than preventive – contrary to the UNGPs, which prioritise proactive dialogue [54] UNGP 18.
    .

Conclusions

  1. The revised Social Standards in the draft simplified ESRS represent a substantial simplification and restructuring effort, creating a more concise and principles-based reporting framework. Centralising former topical DRs in ESRS 2, harmonising disclosures along the policies–actions–targets architecture and eliminating duplicative or overly granular data points have significantly reduced narrative disclosures while retaining core metrics. This redesign improves coherence, comparability and auditability, while maintaining overall alignment with the UNGPs and OECD Guidelines. However, these gains come at the cost of reduced granularity – particularly regarding the identification and articulation of impacts on specific stakeholder groups, transparency of due diligence processes, and visibility of risks affecting vulnerable populations.
  2. From a human rights perspective, the revised architecture risks weakening the practical operability of reporting as a tool to assess compliance with international standards. The removal of topic-specific disclosures on material impacts and the consolidation of human rights policies into generic reporting may result in overly abstract narratives that fail to capture the differentiated nature of risks and impacts across worker groups and value chains. Similarly, merging stakeholder engagement, grievance mechanisms and remediation into a single DR risks obscuring whether undertakings have effective, accessible and standards-compliant mechanisms in place, and may inadvertently conflate prevention, consultation and remedy functions, which the UNGPs treat as distinct.
  3. To mitigate these risks while preserving the benefits of simplification, the following targeted corrective measures are recommended: (i) reinstating a limited number of key data points and AR elements to restore granularity and detail (particularly on the identification and assessment of impacts and policy commitments related to specific stakeholder groups), ensuring visibility of high-risk contexts and affected stakeholder groups where international standards require specificity; and (ii) developing detailed NMIG showing how to structure DR 2 disclosures, clearly separating preventive engagement, grievance mechanisms and remediation processes, with concrete examples tailored to different stakeholder groups and risk contexts. Such adjustments would preserve clarity, accountability and human rights effectiveness without reintroducing unnecessary complexity or duplication.
  4. Additionally, the double materiality assessment process for Social Standards should be complemented by requiring undertakings to briefly disclose (i) whether/how affected stakeholders were consulted when deeming Social Standards non-material and (ii) any contrary views from rightsholders or credible external sources. Second, authorities should indicate sector-specific enforcement priorities and ‘red flag’ indicators for social disclosures, including minimum evidential thresholds for claims of non-materiality (e.g. proof of due diligence and stakeholder views sought), with worked examples of acceptable versus inadequate responses. Third, undertakings should disclose (i) the top 3–5 value chain countries/commodities with known or plausible severe human rights risks (per international benchmarks) and (ii) whether/how these informed materiality assessment – preserving basic risk visibility without granular reporting.

FRA Opinion 3

In the context of adopting ‘Social Standards – Cross-cutting’ in the ESRS delegated act, the European Commission should have due regard to the following considerations.

  1. The shift to centralised, principle-based disclosures in ESRS 2 risks a loss of granularity where it is needed. Consequently, the European Commission should provide guidance to support robust identification and assessment of impacts on specific stakeholder groups (own workforce, value chain workers, affected communities, consumers).
  2. Consolidating human rights policy requirements into cross-cutting disclosures risks reducing topic- and group-specific articulation of commitments. In the delegated act, former data points and ARs on policy commitments related to specific stakeholder groups should be included as guidance (S1-1, former paragraph 20 and 24; S2-1, former paragraph 17; S3-1, former paragraph 16; and S4-1, former paragraph 16).
  3. Deleting data points on grievance channel effectiveness risks driving tick-box disclosures on existence of grievance mechanisms with little to no consideration of their effects. In order to avoid this, the delegated act could reinstate the data points on how the undertaking ensures the effectiveness of the grievance channels, including through the involvement of stakeholders who are the intended users (S1-1, former paragraph 32(e); S2 and S3, former paragraph 27(d); and S1-4, former paragraph 25(d)).
  4. Merging stakeholder engagement, grievance mechanisms and remediation into a single disclosure risks obscuring whether preventive engagement and remedy are effectively in place, which are functions that the UNGPs treat as distinct. To prevent this, the European Commission or EFRAG should develop detailed NMIG demonstrating how to structure DR 2 disclosures, clearly separating (i) engagement efforts with the respective stakeholder group, (ii) grievance mechanisms and (iii) remediation processes, with concrete examples tailored to different stakeholder groups and risk contexts.


3.2. S1 – Own Workforce


  1. The revised ESRS S1 (‘Own Workforce’) Standard reduces data points by 56.7 %, reflecting the broader simplification approach applied to all Social Standards, including reduced granularity, deletion or re‑prioritisation of certain metrics, enhanced clarity in definitions and examples, and standardised formulas. The following provides an analysis of the human rights impact of the key modifications by each DR.

Human rights impact and legal analysis

Employee headcount

  1. DR S1-5 now requires country-specific data for the 10 largest countries by employee count, provided that each has at least 50 employees, replacing the prior rule covering any country with ≥ 10 % of the total workforce. This change is mirrored in DR S1-7 (‘Collective Bargaining Coverage and Social Dialogue’), which requires undertakings within the European Economic Area to report collective bargaining data for countries meeting the same ‘10 largest, ≥ 50 employees’ criterion. The 50-employee de minimis threshold remains unchanged to align with the EU Information and Consultation of Employees Directive, which triggers employee consultation rights at that level [55] Directive 2002/14/EC of the European Parliament and of the Council of 11 March 2002 establishing a general framework for informing and consulting employees in the European Community (OJ L 80, 23.3.2002, p. 29, ELI: http://data.europa.eu/eli/dir/2002/14/oj), Article 3(1)(a).
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  2. The adjustment seeks to enhance transparency by capturing more meaningful country-level information. Previously, the 10 % threshold often limited multinationals to reporting on just a few large countries, obscuring workforce data from many locations [56] EFRAG, Basis for conclusions – Draft amended ESRSBasis for Conclusions: Draft amended ESRS – December 2025, Brussels, 2025, p. 95, paragraph 467.
    . By switching to the top 10 countries, ESRS S1 ensures that disclosures cover where most employees work – especially for undertakings with highly distributed workforces. A public consultation found that over half of respondents supported this new threshold, citing that it would provide better visibility and that undertakings already have these data readily available [57] EFRAG, Basis for conclusions – Draft amended ESRSBasis for Conclusions: Draft amended ESRS – December 2025, Brussels, 2025, p. 95, paragraph 467.
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  3. Yet, the use of a fixed numerical threshold creates inherent blind spots. Limiting detailed reporting to the top 10 countries leaves smaller operations or outlying subsidiaries below the radar of mandatory disclosure. For a large undertaking operating in, say, 20 countries, any country ranked 11th or lower by headcount will not get a dedicated breakdown in S1-5. This raise concerns that certain workforce characteristics in these smaller locations – which may include demographic data (e.g. gender or age composition) or contract types – will not be transparent. Notably, the streamlined ESRS revisions already remove some granular breakdowns (e.g. age distribution and various gender-disaggregated metrics) to reduce complexity. Thus, if an undertaking’s minor locations have unique issues (e.g. an overwhelming gender imbalance or predominantly temporary workers), stakeholders might not learn this from the standard disclosures.
  4. Workforce size is not a reliable proxy for risk. Smaller, high‑risk sites—such as manufacturing or mining operations in countries with weak labour protections—may employ fewer than 50 people yet pose significant human rights risks. A headcount‑based focus risks overlooking precisely those contexts where vulnerable workers or severe labour issues persist. The challenge lies in balancing the pursuit of concise, comparable data against the need to capture salient human rights impacts wherever they occur.
  5. Furthermore, considering the CSRD’s significant reduction in scope (now limited to undertakings with over 1 000 employees and a net turnover of more than EUR 450 million), the continued need for this threshold is debatable such that it would be worth reassessing whether these thresholds should be relaxed or complemented by a risk-based override, based on, for example, whether the sector (or location) of the activity is high risk, in line with the OECD Guidelines, which recommend that enterprises undertake risk-based due diligence.

Non-employee

  1. The definition of non-employee is largely unchanged but clarified, with former AR 62 now moved into the objectives of S1. New paragraph 7 provides examples of non‑employees, namely self‑employed people and those supplied by entities primarily engaged in employment activities. The draft simplified ESRS retain the original examples of self‑employed persons but drop important guidance on people provided by such entities, notably former AR 62’s reference to third‑party workers under the undertaking’s direction was deleted, along with the example of “people performing regular work at the same site as employees.” This definition is also narrower than GRI Standards, which define non-employees as ‘those who perform work for the organization but are not in an employment relationship with the organization’ [58] See GRI, GRI 2 – General disclosures 2021, Disclosure 2-8, ‘Workers who are not employees’, Guidance to 2-8-a.
    . The GRI Standards reflect a functional approach that relies on whether the work of non-employees is effectively controlled by the undertaking, thus reflecting a broader understanding and allowing a fairer presentation of non-employee.
  2. While retaining the obligation to report on the total number of non-employees, which is helpful for tracking the scale of precarious labour, the revised ESRS S1-6 removes all voluntary data points for non-employees. This loss of contextual information reduces transparency and undermines scrutiny of these workers’ conditions. However, disclosing the most common types of non-employees and the type of work performed would provide relevant data to understand the undertaking’s labour force composition and vulnerabilities.

Adequate wages

  1. The requirement for undertakings to disclose whether all employees receive an adequate wage serves as an important safeguard for workers’ fundamental human rights. Adequate remuneration lies at the heart of ensuring a dignified existence for workers and their families – enabling them to meet basic needs (including children’s needs) and to live with dignity [59] UNICEF, The Amended ESRS Exposure Drafts: – A summary of UNICEF’s response‘The amended ESRS exposure drafts: A summary of UNICEF’s response’, UNICEF website, 29 September 2025.()              UNICEF, The Amended ESRS Exposure Drafts: – A summary of UNICEF’s response‘, UNICEF website, 29 September 2025.
    . This aligns with established international human rights standards. For example, Article 23(3) of the Universal Declaration of Human Rights recognises everyone’s right to ‘just and favourable remuneration’ that guarantees ‘an existence worthy of human dignity’ for themselves and their family. Likewise, Article 7 of the International Covenant on Economic, Social and Cultural Rights and Article 4(1) of the European Social Charter affirm the right to fair wages sufficient for a decent living. By mandating transparency on wage adequacy, the ESRS align corporate disclosures with the human right to a living wage, reinforcing that undertakings have a responsibility to respect workers’ right to an adequate standard of living.
  2. Importantly, the ESRS Glossary defines “adequate wages” as “a wage that provides for the satisfaction of the needs of the worker and their family in light of national economic and social conditions’, consistent with Principle 6 of the European Pillar of Social Rights, which has been reflected in recital 5 of the EU Directive on Adequate Minimum Wages [60] Directive (EU) 2022/2041 of the European Parliament and of the Council of 19 October 2022 on adequate minimum wages in the European Union (OJ L 275, 25.10.2022, p. 33, ELI: http://data.europa.eu/eli/dir/2022/2041/oj).
    . Hence, this DR is firmly grounded in, and reinforces, these international and European norms. Requiring undertakings to report on adequate wages thus serves a clear human rights purpose: it shines a light on whether employers are upholding a basic right of workers to earn enough for a life of dignity. This transparency can drive improvements, as undertakings will be encouraged to ensure that all employees are paid at least a decent, adequate wage in line with human rights standards.
  3. The manner in which an undertaking must assess adequate wages – especially for employees outside the EU – has been the subject of debate in developing these standards. In the simplified ESRS S1, the previous AR 73(b) three-step hierarchy has been deleted and replaced with a more flexible, principle-based approach to determine adequate wages outside the EU. Instead of a rigid hierarchy that might have overly relied on local minimum wage laws, the new approach provides a specific framework for undertakings to assess what wage level is needed for a decent standard of living, anchored in the International Labour Organization (ILO) principles for estimating a living wage. The ILO’s 2024 principles for estimating a living wage set out the methodology for calculating a sound living wage [61] Draft simplified ESRS – S1, application requirement 20(b)(i).
    . These principles are effectively built into the ESRS’s new approach to adequate wages. In summary, any determination of a living or adequate wage should be evidence-based and grounded in an objective estimation of workers’ needs (for nutritious food, decent housing, healthcare, education, etc.), rather than arbitrary figures. The process should also be transparent, relying on robust data and involving consultation and social dialogue – meaning that employers and worker representatives (unions) should be consulted in developing the wage benchmark, to ensure buy-in and to reflect real local conditions [62] See International Labour Organization (ILO), ILO principles on estimating a living wage‘ILO principles on estimating a living wage’, ILO website.
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  4. This shift to an ILO living wage framework is a significant improvement from a human rights perspective. It addresses the criticism that statutory minimum wages – which formed a baseline in the old method – often fall far short of any adequate or living wage threshold. By referencing living wage estimates rather than just legal minima, the standard pushes undertakings to be more ambitious in their commitments to workers, discouraging a ‘lowest common denominator’ approach. In effect, it urges undertakings to measure their lowest-paid employees’ wages against what it actually costs to live decently in a given country or region, not merely against the legal floor, which in many places may be inadequate. This is a positive development that should be maintained: it aligns corporate practice with the widely endorsed principle that workers should earn enough to support themselves and their families above the poverty line. It also helps harmonise reporting with global initiatives advocating for a living wage. Some stakeholders proposed eliminating the EU/non-EU distinction [63] UNICEF (2025), The Amended ESRS Exposure Drafts – A summary of UNICEF’s response.
    , but this overlooks harmonised EU rules on adequate minimum wages, which are not applicable outside the EU, as well as differing socioeconomic realities. In terms of human rights impacts, maintaining the EU/non-EU distinction allows the standard to be grounded in existing law where available, while still demanding that undertakings pursue the underlying human right (a living wage) for all their workers.
  5. To improve comparability and accountability, the ESRS S1-9 also adds a requirement that undertakings disclose the benchmark or reference used to determine what counts as an adequate wage [64] Draft simplified ESRS – S1, paragraph 27, application requirement 18. See also EFRAG, Issue paper – To support SRB directions after the consultation on adequate wages , 2025, p. 7, paragraph 27.
    . This directly addresses concerns that, without a common reference, data would be difficult to compare across companies or countries [65] EFRAG, Issue paper – To support SRB directions after the consultation on adequate wages , p. 7, paragraph 27.
    . Now, an undertaking must state, for example, whether it uses a particular living wage index, a percentage of median income or a national poverty line as the yardstick for adequacy.
  6. However, simply naming a benchmark is insufficient – the disclosure should explain how that benchmark was applied and calculated. While the NMIG issued with the ESRS lacks detailed instructions on this (which would be most welcome), the general transparency principles in ESRS 2 GDR-M require undertakings to explain methodologies and sources for metrics. In practice, to comply with DR S1-9, a company cannot merely assert ‘all our employees are paid an adequate wage’ (using, say, the XYZ living wage as a benchmark). It must also disclose how that XYZ benchmark was determined – for example which country’s data and what year was used, what constituted a decent living standard in that calculation – and how the undertaking assessed its own wage data against it. This detail is necessary for verification and understanding: without it, neither auditors nor stakeholders would be able to verify that the undertaking meets the adequate wage threshold or grasp any gaps. ESRS 2 GDR-M indeed calls for disclosure of calculation methodologies, input parameters and context for any reported metrics, so undertakings must be transparent about their wage adequacy assessments.
  7. Ensuring this transparency serves a clear human rights rationale: it compels undertakings to rigorously engage with the concept of a living wage and provides stakeholders with the information needed to hold undertakings accountable for respecting workers’ right to fair pay. A cursory statement would undermine the standard’s effectiveness, so disclosures must be sufficiently detailed and evidence-based.
  8. Overall, the adequate wages DR in ESRS S1 meaningfully integrates human rights principles into corporate reporting. It forces undertakings to confront the question ‘Are we paying our workers enough to live in dignity?’, thereby aligning with international standards on living wages.

Gender equality

  1. Gender equality is a human rights issue that deserves particular attention in the simplified ESRS. Three clusters of changes are noteworthy: (i) the revision of S1-15; (ii) the deletion of several data points requiring a breakdown by gender; and (iii) the replacement of the term ‘parental leave’ with ‘maternity leave’ in S1-10. All are relevant in light of international and European frameworks protecting and promoting gender equality and non-discrimination [66] Universal Declaration of Human Rights, Articles 2 and 7; United Nations Convention on the Elimination of All Forms of Discrimination against Women, Article 2; Treaty on European Union, Article 2; Treaty on the Functioning of the European Union, Article 8; Charter of Fundamental Rights of the European Union, Articles 21 and 23.
    , with the revision of S1-15 being especially significant for equal pay and gender pay gap standards [67] Universal Declaration of Human Rights, Article 23(2); International Covenant on Economic, Social and Cultural Rights, Article 7; United Nations Convention on the Elimination of All Forms of Discrimination against Women, Article 11(1)(d); ILO Convention No 100 – Equal Remuneration; ILO Convention No 111 – Discrimination (Employment and Occupation); European Social Charter (Revised), Articles 4(3) and 20; Treaty on the Functioning of the European Union, Article 157; Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (OJ L 204, 26.7.2006, p. 23, ELI: http://data.europa.eu/eli/dir/2006/54/oj); Directive (EU) 2023/970 of the European Parliament and of the Council of 10 May 2023 to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms (OJ L 132, 17.5.2023, p. 21, ELI: http://data.europa.eu/eli/dir/2023/970/oj); European Pillar of Social Rights, Principle 2; 2020–2025 EU gender equality strategy.
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  2. To understand and apply S1-15 and the obligation to report on the gender pay gap, the glossary’s definition of the term ‘pay’ is key: ‘the ordinary basic or minimum wage or salary and any other remuneration, whether in cash or in kind, which the worker receives directly or indirectly (“complementary or variable components”), in respect of his/her employment from his/her employer’. This definition matches that in the 2023 ESRS and the Pay Transparency Directive (with the only difference that it refers to ‘remuneration’ rather than ‘consideration’).
  3. Although gender pay gap is not defined in the glossary, the DR understands it as the ‘difference in average pay levels between female and male employees, expressed as a percentage of the average pay level of male employees’. This is in line with the definition in the Pay Transparency Directive [68] Article 3(1)(c): ‘“gender pay gap” means the difference in average pay levels between female and male workers of an employer expressed as a percentage of the average pay level of male workers’.
    . The revised DR clarifies how the gender pay gap must be calculated, with new ARs 32 and 33 listing the elements to be considered when calculating the gender pay gap.
  4. The retention of the DR on the gender pay gap is a very positive aspect of the simplified ESRS. Gathering data on the gender pay gap in undertakings is essential because it provides objective evidence of structural gender inequalities in pay outcomes, enables transparency and accountability, and is a prerequisite for tracking compliance with the abovementioned obligations on equal pay and non-discrimination.
  5. However, DR S1-15 requires only the disclosure of the unadjusted gender pay gap – that is, the raw percentage difference in average pay between all male and all female employees – without any obligation to present an adjusted analysis or a more detailed breakdown in accordance with the SFDR PAI indicators [69] Indicator No 12 in Table I of Annex I to Commission Delegated Regulation (EU) 2022/1288.
    and the environmental, social and governance benchmarks [70] Indicator ‘Weighted average gender pay gap’ in Sections 1 and 2 of Annex II, Regulation (EU) 2020/1816.
    . By contrast, the GRI framework goes further, requiring disclosure of the ratio of the basic salary and remuneration of women to men for each employee category and by significant locations of operation [71] See GRI Disclosure 405-2.
    . In practice, under DR S1-15 in the simplified ESRS, undertakings merely report the overall pay gap and, if they choose, voluntarily provide additional context (e.g. by age group or country) to ‘complement’ the unadjusted figure. This approach contrasts sharply with EU equal pay laws and the Pay Transparency Directive: Directive (EU) 2023/1857 specifically requires employers to report gender pay differentials and to analyse any unexplained gaps, obliging them to ‘take action’ (e.g. conduct a joint pay assessment) when the gap exceeds 5 % [72] European Council, ‘Gender pay gap: Council adopts new rules on pay transparency’, European Council website, 24 April 2023.
    . By excluding the requirement for adjusted data or explanatory analysis, the ESRS simplification undermines the level of transparency that the directive seeks to guarantee. It also appears misaligned with the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) and ILO standards. CEDAW guarantees ‘the right to equal remuneration … for work of equal value’ (Article 11(1)(d)), while the ILO Equal Remuneration Convention, 1951 (No 100) stipulates that pay rates must be established ‘without discrimination based on sex’ (Article 1(b)). By mandating only a single aggregate figure, the simplified ESRS arguably fall short of these benchmarks: undertakings may achieve formal compliance while lacking the granular analysis necessary to identify potential discrimination or systemic bias in pay structures.
  6. Similarly, the simplification withdraws gender disaggregation from several workforce metrics, weakening insight into gender-specific outcomes. Specifically, the simplified ESRS delete mandatory gender breakdowns from several data points: non-guaranteed-hours employees (S1-5), percentage of participation in performance and career development reviews and average hours of training (S1-12), and percentage of employees entitled to family-related leave who actually took such leave (S1-14). Together with the deletion of voluntary data points, the simplified standards obscure information on gender gaps and structural barriers particularly affecting women – diverging from GRI requirements on the collection of gender breakdown data across several metrics (i.e. employees per employee category, including non-guaranteed-hours employees, governance body composition, entry-level wage, new employees and turnover, training hours and percentage of employees receiving performance reviews) [73] See GRI Disclosures 2-7, 2-9, 401-1, 401-3, 404-1, 404-3, 405.
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  7. The deletion of the obligation to disclose the breakdown by gender of non-guaranteed-hours employees in S1-5 removes insight into the most precarious category of employees and contributes to masking increased vulnerabilities, as is the case of women working in more precarious situations. While not contravening relevant legal instruments, it undermines the efforts to achieve equal treatment between women and men and to bridge the gender pay gap.
  8. The S1-14 deletion of the obligation to report on the percentage of employees entitled to family-related leave who actually took such leave is similarly concerning. While the data point on reporting the percentage of employees entitled to take family-related leave has been retained, this does not require a breakdown by gender. Having both the metrics broken down by gender would be important to assess gender equality in access and exercise of parental leave, which is a well-documented structural equality issue across Europe and internationally, weighing heavily on women [74] Organisation for Economic Co-operation and Development (OECD), Paid Leave for Fathers: Recent OECD policy trends, OECD Publishing, Paris, 2025; ILO, ILO Care Economy Brief: Closing the gender gap in paid parental leaves – Better parental leaves for a more caring world of work, Geneva, 2025.
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  9. The shift from ‘parental leave’ to ‘maternity leave’ in S110 (‘Social Protection’) likewise reflects a notable narrowing of focus. Under the simplified S110, undertakings must disclose whether employees lack social protection during four ‘major life events’: sickness, unemployment, workplace injury/disability and maternity leave. The 2023 ESRSESRS (DR S1-11) referenced parental leave instead of maternity leave, aligning more closely with the EU’s Work–Life Balance Directive (Directive (EU) 2019/1158), which guarantees parental leave for both parents (see DR S1-10, paragraph 30 (74 amended). EU law actively promotes shared caregiving responsibilities: Directive (EU) 2019/1158 entitles each parent to at least four months of parental leave (two of which are non-transferable and must be paid). By replacing ‘parental’ with ‘maternity’, the simplified ESRS risk implying that only maternity leave – typically understood as the time off related to pregnancy and childbirth – falls within the scope of a social protection event, thereby sidelining paternal leave and broader parental entitlements. This adjustment works against the EU’s overarching gender‐equality objectives: it obscures the availability of leave for fathers and reinforces the stereotype that childcare remains primarily a ‘women’s issue’. In practical terms, undertakings may limit their reporting to maternity leave coverage alone, without addressing whether they provide parental leave, or tracking uptake rates or return-to-work patterns by gender. These gaps impede meaningful transparency on work–family balance and potential discrimination, undermining the intent of both EU law and international standards (e.g. CEDAW advocates for ‘supporting services to combine family obligations with work responsibilities’).
  10. Taken together, these revisions weaken the ESRS’ ability to expose and address structural gender disparities. Companies will possess less robust data to pinpoint patterns, such as women’s over-representation in variable-hour or part-time roles, or their under-representation in leadership development opportunities. Without mandatory gender-disaggregated metrics, intersectional inequalities remain invisible – even as the EU places new emphasis on intersectionality in areas like pay gaps and disability-inclusive reporting. The Pay Transparency Directive, for example, breaks new ground by requiring scrutiny of ‘multiple forms of inequality’ (e.g. the interplay of gender with ethnicity or disability) within pay structures. Should ESRS disclosures stay confined to aggregate figures, undertakings will struggle to evaluate how intersecting factors (like immigrant status, age or disability) disproportionately impact women across their operations or supply chains. This is especially problematic for supply chain due diligence: without gender-disaggregated indicators in their core reporting, undertakings have little incentive to collect comparable data from suppliers, thereby diluting the broader aims of sustainability reporting.

Human rights / discrimination incidents

  1. The simplified S1-16 substantially narrows the scope of reportable human rights incidents compared with the 2023 standard. A welcome improvement is the removal of the ‘severe’ qualifier, avoiding confusion with the terminology of the UNGPs and the OECD guidelines (‘severe human rights impacts’). Yet, under the 2023 S1-16, undertakings were required to disclose the number of ‘work-related incidents and/or complaints’ (including those involving severe human rights impacts) affecting their own workforce, alongside details on related fines and remediation outcomes. Specifically, this encompassed (i) all incidents of discrimination (covering listed grounds, including harassment), (ii) the number of complaints filed through operational grievance channels (e.g. OECD national contact points) and (iii) total fines, penalties and compensation arising from those incidents.
  2. By contrast, the revised, simplified S1-16 limits mandatory disclosures to (i) the number of ‘incidents of discrimination at work’ based on specified grounds (gender, race, disability, age, sexual orientation, etc.) and (ii) the number of other ‘human rights incidents’ linked to the workforce (excluding those discrimination incidents already captured under paragraph 42(a)) – together with (iii), the total amount of fines for those incidents (DR S1-16, paragraph 42 ((103(a)(c) and 104(a)(b) amended)). Crucially, the updated standard eliminates any requirement to disclose complaints or grievance filings. There is no equivalent in the amended S1-16 to the original mandate for reporting ‘complaints filed through channels (including grievance mechanisms)’, meaning that undertakings face no obligation to reveal how many concerns were raised by workers, whether internally or through external mechanisms.
  3. Even more significant is the revised S1-16 imposition of a substantively higher threshold for reporting: only ‘substantiated’ incidents qualify for disclosure. The application guidance (AR 36–38) defines reportable incidents as ‘substantiated instances’ – namely either judicial or non-judicial proceedings (e.g. court cases, arbitration or OECD national contact point complaints) or cases ‘registered by the undertaking’ through its processes that relate to violations of ‘internationally recognised human rights’ (as per Article 29(2)(b)(iii) of the CSRD). This replaces the 2023 standard’s broader concept of ‘work-related incidents’ and ‘severe human rights impacts’. In plain terms, only events validated by the undertaking or an authority must now be disclosed.
  4. The term ‘substantiated’ is not defined in the mandatory text, creating legal ambiguity: undertakings may interpret it broadly, potentially excluding allegations still under investigation or worker-reported incidents not (yet) internally validated. While this approach arguably exempts undertakings from disclosing frivolous, unverified or ill-intentioned allegations, which is in line with due process principles, without additional guidance and parameters it risks becoming an additional layer to exempt reporting. Such guidance would be all the more relevant considering the given power imbalances and information asymmetries between undertakings and potentially injured parties [75] UNGP 26
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  5. This new focus on substantiation, combined with the removal of complaint data, also means that the standard’s treatment of grievance mechanisms and remediation is considerably narrowed. The 2023 framework required undertakings to report not only the raw number of grievances submitted through established channels, but also those deemed ‘substantiated’ and ‘resolved through remediation’. The simplified S1-16 eliminates such quantitative grievance metrics from the mandatory requirements. Consequently, an undertaking could receive numerous worker complaints (or even credible allegations of abuse) without triggering any disclosure obligation, so long as the undertaking has not yet formally ‘substantiated’ them. Moreover, there is no requirement to disclose the status of investigations or remedial actions taken: the simplified S1-16 makes no mention of remediation plans, outcomes or even the ongoing or closed status of incidents. This represents a shift away from process-oriented transparency towards a narrower focus on conclusive findings.
  6. The legal implications of these changes are significant when measured against international norms. The UNGPs stress remediation and comprehensive reporting: UNGP 22 mandates that where a company causes or contributes to adverse impacts, it ‘should provide for or cooperate in their remediation through legitimate processes’. The UNGPs commentary further underscores that human rights reporting ‘should cover topics and indicators concerning how enterprises identify and address adverse impacts on human rights’ [76] SeeUnited Nations Office of the High Commissioner for Human Rights, Guiding Principles on Business and Human Rights : Implementing the United Nations ‘"‘Protect, Respect and Remedy’"’ Framework, United Nations, New York and Geneva, 2011, p. 24.
    . Yet, the revised S1-16 permits undertakings to omit from their report any adverse impact allegations that are not formally verified, diverging from the proactive ethos of due diligence. Similarly, the OECD Guidelines for Multinational Enterprises (Part IV.6 on Human rights) explicitly urge enterprises to carry out human rights due diligence and ‘provide for or co-operate through legitimate processes in the remediation of adverse human rights impacts’ that they cause or contribute to. By focusing solely on substantiated incidents and omitting remediation or even complaint data, the new ESRS language risks weakening these accountability principles. In effect, stakeholders will see only the tip of the iceberg (i.e. the incidents that the company itself has ‘confirmed’), rather than the broader spectrum of worker grievances and human rights concerns that the enterprise has encountered.
  7. In summary, the simplified S1-16 introduces problematic ambiguities: it eases the reporting load on undertakings at the cost of eroding transparency on adverse impacts, and it risks creating accountability gaps. Without further clarification or complementary requirements, the revised provisions could significantly weaken the alignment of the ESRS with the UNGPs, OECD guidelines and the EU’s commitments to fundamental rights.

Other reductions in data points

  1. The deletion of the obligation to disclose the absolute number of employees who have left the company (S1-5) warrants note. While the turnover rate may be more informative, raw numbers enable easier year-on-year comparisons and provide additional insight to assess the scale and context of workforce churn. Importantly, undertakings already maintain these data, so reporting imposes no additional burden.
  2. The deletion of age distribution of workers (S1-8) and social protection for retirement (S1-10) also reduces attention to vulnerable groups, particularly older workers. The deletion regarding retirement specifically – justified as ‘reducing granularity’, with no further explanation – is problematic. The right to social protection includes protection in old age [77] ILO Convention No 102 – Minimum Standards of Social Security, Part V; ILO Convention No 128 – Invalidity, Old-age and Survivors’ Benefits, Part III; European Code of Social Security, Part V; Charter of Fundamental Rights of the European Union, Article 34.
    . Workers’ rights extend beyond active employment, as career-long social security contributions entitle workers to old-age protection upon retirement and are directly linked to a dignified and secure income in old age. Principle 15 of the European Pillar of Social Rights recognises this, stating that ‘workers and the self-employed in retirement have the right to a pension commensurate to their contributions and ensuring an adequate income’ and that ‘everyone in old age has the right to resources that ensure living in dignity’. Removing retirement as one of the life events covered by social protection seems unwarranted and not in line with legal standards.

Health and safety metrics

  1. The terms used in S1-13 have been revised in the glossary. The DR no longer uses the term ‘work-related injuries’ but ‘work-related accidents’. The term ‘recordable work-related accident’ is defined in the glossary, along with ‘recordable work-related ill health’. The first is inspired by EU legislation [78] Specifically, Regulation (EC) No 1338/2008 of the European Parliament and of the Council of 16 December 2008 on Community statistics on public health and health and safety at work (OJ L 354, 31.12.2008, p. 70, ELI: https://eur-lex.europa.eu/eli/reg/2008/1338/oj/eng), Article 3(d).
    , while the second term follows guidance from the European Agency for Safety and Health at Work. While the revision of the terms employed can be seen as a positive development, improving consistency and comparability and aligning the ESRS more closely with OSH regulation, it is not sufficient to eliminate implementation doubts and difficulties arising from the DR.
  2. Revised paragraph 36(b) now requires undertakings to report only the sum of the number of fatalities from (i) recordable work-related accidents among all people in the undertaking’s own workforce plus workers on the undertaking’s sites (though not part of its own workforce) and (ii) recordable work-related ill health among employees. Requiring the reporting of only the sum of both, rather than each number individually, dilutes the degree of transparency of the types of occupational health and safety impacts across the undertaking’s own workforce [79] GRI, Key interoperability considerations between Draft Simplified ESRS (November 2025)
    . This may complicate the monitoring of compliance with Article 31 of the Charter, which protects fair and just working conditions. It also diverts from the GRI standards, which require separate reporting of work-related injuries and work-related ill health, for both employees and non-employees [80] See GRI Disclosures 403-9 and 403-10.
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  3. The data point on the days lost to fatalities has been deleted [81] 2023 ESRS – S1, paragraph 88(e); draft simplified ESRS, paragraph 36(e).
     – reportedly due to lacking methodology [82] Log of Amendments ESRS S1 (December 2025), p. 42.
    . Data reported on fatalities due to work-related ill health among non-employees are also no longer required [83] 2023 ESRS – S1, paragraph 88(b); draft simplified ESRS, paragraph 36(b)(i).
    , although no specific explanation has been provided. Both exclusions weaken visibility of fatalities and worker protection, diverging from the SFDR PAIs and GRI standards. The number of days lost to fatalities is an indicator under the SFDR [84] Corrigendum to Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022 supplementing Regulation (EU) 2019/2088 of the European Parliament and of the Council with regard to regulatory technical standards specifying the details of the content and presentation of the information in relation to the principle of ‘do no significant harm’, specifying the content, methodologies and presentation of information in relation to sustainability indicators and adverse sustainability impacts, and the content and presentation of the information in relation to the promotion of environmental or social characteristics and sustainable investment objectives in pre-contractual documents, on websites and in periodic reports (Official Journal of the European Union L 196 of 25 July 2022) (OJ L 332, 27.12.2022, p. 1, ELI: http://data.europa.eu/eli/reg_del/2022/1288/corrigendum/2022-12-27/oj), Table 3.
    . The GRI standards require the disclosure of information on the number of fatalities as a result of work-related ill health for all workers who are not employees, but whose work and/or workplace is controlled by the organisation [85] See GRI Disclosure 403-10.
    .
  4. Conversely, data on the number of fatalities from recordable work-related accidents now cover not only ‘all people in the undertaking’s own workforce’, but also ‘workers who work on the undertaking’s sites, but are not part of its own workforce’. This is a very positive development, as it introduces a safety net covering any other worker present at the workplace who may be exposed to work-related risks, regardless of contractual status. Notwithstanding, further clarity should be provided to undertakings on how to implement this data point.

Work–life balance

  1. The obligation to report on the percentage of employees entitled to family-related leave who actually took such leave (S1-14) has been deleted and moved to the NMIG as optional contextual information. UNICEF opposed this, arguing that undertakings should disclose actual uptake, not just the percentage of employees entitled to take family leave [86] UNICEF, The Amended ESRS Exposure Drafts: – A summary of UNICEF’s response, UNICEF website, 29 September 2025.
    . This change, among others, contributed to one of the dissenting votes to the approval of ESRS S1 [87] EFRAG, EFRAG’s technical advice to the European Commission regarding amended European sustainability reporting standards (amended ESRS), Brussels, 2025, p. 10.
    . Actual uptake is an important metric for assessing whether the undertaking’s workers exercise this right – protected by the Charter (Article 33) and specific EU legislation [88] Directive (EU) 2019/1158 of the European Parliament and of the Council of 20 June 2019 on work-life balance for parents and carers and repealing Council Directive 2010/18/EU (OJ L 188, 12.7.2019, p. 79, ELI: http://data.europa.eu/eli/dir/2019/1158/oj).
    . The share of workers taking family-related leave may be an indicator of the undertaking’s reluctance to allow workers to take such leave or workers’ fear of retaliation or being discriminated against for having requested or taken leave. The current formulation is also not consistent with the GRI standards (401-3-b).
  2. S1-14 is another DR where the ESRS could have been more ambitious, as it remains limited to the metric on family-related leave. Notwithstanding, there are other aspects of work–life balance, recognised in international and EU instruments [89] United Nations Convention on the Rights of the Child, Articles 3 and 18; ILO Convention No 156 – Workers with Family Responsibilities, Articles 3 and 5; European Social Charter (Revised), Article 27; Charter of Fundamental Rights of the European Union, Article 33; Directive (EU) 2019/1158 of the European Parliament and of the Council of 20 June 2019 on work-life balance for parents and carers and repealing Council Directive 2010/18/EU (OJ L 188, 12.7.2019, p. 79, ELI: http://data.europa.eu/eli/dir/2019/1158/oj); Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time (OJ L 299, 18.11.2003, p. 9ELI: http://data.europa.eu/eli/dir/2003/88/oj); European Pillar of Social Rights, Principle 9.
    , that merit consideration – such as flexible working time, access to daycare facilities for all employees, and the novel right to disconnect. In the 2023 ESRS, Appendix A.2 of S1 provided examples of policies on work–life balance, including flexible working time and access to daycare facilities for all employees. This has now been deleted from the ESRS but should inform future NMIG and standards revisions.

Persons with disabilities

  1. The new AR 21 in DR S1-11 (‘Persons with disabilities’) clarifies that data on persons with disabilities must only be reported if they can be lawfully collected. This is a positive development, clarifying that the reporting obligations do not override other rules, such as data protection and the right to privacy protected under EU and international law [90] European Convention on Human Rights, Article 8; Charter of Fundamental Rights of the European Union, Article 7.
    . In fact, under EU law [91] Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1, ELI: http://data.europa.eu/eli/reg/2016/679/oj).
    , health-related data, such as data on disabilities, qualify as sensitive personal data, meaning that their collection and processing is subject to stricter rules. Notwithstanding, clear guidance is essential to prevent misinterpretation of this data point and to avoid under‑reporting.
  2. While the Basis for Conclusions report accompanying the draft amended ESRS calls for further reducing or making voluntary the DR on persons with disabilities due to legal concerns [92] EFRAG, Basis for conclusions – Draft amended ESRS – December 2025, Brussels, 2025, p. 98, paragraph 482.
    , it is essential that this data point is retained. Transparency on the efforts to employ, and integrate, persons with disabilities aligns with international and European standards pushing for the integration of persons with disabilities [93] United Nations Convention on the Rights of Persons with Disabilities, Article 27; Charter of Fundamental Rights of the European Union, Article 26; European Pillar of Social Rights, Principle 17.
    .

Conclusions

  1. Overall, the simplified ESRS S1 demonstrates clear positive developments in terms of simplification, clarity and, in some areas, strengthened conceptual alignment with international standards. The significant reduction in data points and word count, alongside clearer definitions and standardised formulas, aims to ease reporting burdens while improving usability. Positive elements include the revised threshold for significant employment, which better focuses disclosures on where most of the workforce is located, and the retention and clarification of the gender pay gap disclosure. Further welcome changes are the extension of health and safety fatality reporting to all workers present on the undertaking’s sites (regardless of contractual status) and the clarification that data on persons with disabilities must be reported only where lawfully collectible, respecting data protection and privacy rules. The revised methodology for assessing adequate wages outside the EU is a step forward, aligning the ESRS with ILO living wage principles and discouraging reliance on low statutory minimum wages as the main benchmark. This can materially strengthen protection of the right to a decent living wage if implemented with sufficient transparency.
  2. At the same time, the analysis of the revised S1 reveals several concerning elements. The shift from a ≥ 10 % workforce threshold to country-specific reporting for the 10 largest countries by employee headcount (each with at least 50 employees) will, in many cases, enhance visibility for undertakings with distributed workforces by bringing more meaningful country-level data into scope and avoiding the prior situation where multinationals reported only on a small number of large countries. However, a fixed ‘top 10, ≥ 50 employees’ rule inevitably generates blind spots: smaller operations outside the top 10 may fall entirely outside mandatory country breakdowns, even where workforce characteristics (including contract types or demographic patterns) are atypical, and the simultaneous streamlining of granular breakdowns heightens the risk that such issues remain invisible. Crucially, headcount is not a proxy for human rights risk: higher-risk sites (such as small-scale mines in conflict zones, garment factories in countries with weak labour laws, or agricultural operations reliant on migrant workers) may be small or fall below the 50-employee threshold, yet present disproportionate labour rights concerns. In light of the CSRD’s reduced scope (undertakings with over 1 000 employees and a turnover of more than EUR 450 million), the continuing need for strict thresholds is questionable. This approach could be complemented with a risk-based override so that country- or site-level disclosure is required where salient workforce risks are plausible, including in smaller operations or high-risk sectors and contexts, and to reassess whether the thresholds remain justified given the reduced reporting population.
  3. The requirement to disclose whether all employees receive an adequate wage is a strong human rights safeguard, as it operationalises the principle that remuneration must support a life of dignity, and is anchored in recognised international and European norms, as well as the ESRS glossary definition. Replacing the earlier rigid non-EU hierarchy with a more flexible, principle-based approach anchored in the ILO living wage principles is a meaningful improvement, responding to criticism that statutory minimum wages are often an inadequate proxy for a living wage, and strengthening the likelihood that undertakings assess wages against objective needs rather than legal minima. The added requirement to disclose the benchmark or reference used further strengthens comparability, but the analysis shows that naming a benchmark or reference alone is insufficient for accountability: without explaining how it was determined and applied, stakeholders and auditors cannot properly assess or verify adequacy claims. The corresponding recommendation is to retain the ILO-anchored approach and the benchmark disclosure while ensuring that undertakings provide sufficiently detailed, evidence-based explanations of the methodology, data sources, parameters and application of the benchmark – consistent with the broader methodology transparency expectations in ESRS 2 GDR-M – so that adequate wage statements are verifiable and meaningful rather than conclusory.
  4. The retention of the gender pay gap disclosure is a clear positive in the simplified ESRS, and clarification of the calculation elements improves comparability. Nonetheless, limiting the requirement to a single, unadjusted, aggregate gender pay gap, without any obligation for adjusted analysis or more granular breakdowns, reduces the standard’s capacity to reveal discrimination and systemic bias in pay structures. More generally, the removal of gender disaggregation across several workforce metrics weakens insight into gender-specific outcomes, obscuring patterns of precarity, unequal access to training and progression, and unequal take-up of family-related leave – issues that are central to tackling structural gender inequality. The shift from ‘parental leave’ to ‘maternity leave’ further narrows the lens in a way that risks sidelining broader parental entitlements and reinforcing stereotypes that caregiving is primarily a women’s responsibility, thereby reducing transparency on work–family balance and potential discrimination. Taken together, these revisions weaken the ESRS’s ability to expose structural gender disparities and render intersectional inequalities harder to detect. The corresponding recommendation is that, while maintaining the streamlined approach, the standard should be complemented by reinstated – or at least explicitly promoted – gender-disaggregated reporting for key metrics where gendered vulnerability is well established (including precarious work, part-time work, training and performance reviews, and uptake of family-related leave). In addition, the framing of leave-related social protection should avoid narrowing reporting to maternity leave alone, so that the availability and use of parental leave for all parents is not rendered invisible.
  5. With respect to human rights and discrimination incidents, the simplified S1-16 improves clarity in some respects, including by dropping the qualifier ‘severe’ and thereby reducing confusion with the terminology used in the UNGPs and OECD guidelines. However, the overall narrowing is substantial and raises transparency and accountability concerns. The removal of mandatory disclosure on complaints and grievances (including those raised through operational grievance channels) means that undertakings may be made aware of numerous concerns without any obligation to report them. Combined with the shift to reporting only ‘substantiated’ incidents – without a definition in the mandatory text – this creates legal ambiguity and enables undertakings to exclude credible allegations that are still under investigation or have not yet been validated through internal processes. The focus on substantiated determinations and the omission of remediation-related disclosure also represent a clear retreat from process-oriented transparency, weakening visibility of how undertakings identify, track, address and remedy harms, and leaving users with ‘only the tip of the iceberg’ rather than an honest picture of encountered risks and grievances. The corresponding recommendation is to restore minimum transparency elements that allow users to assess the robustness of due diligence and remedy in practice, including (at minimum) disclosure of complaint and grievance volumes and clearer parameters or guidance on what counts as ‘substantiated’ and how pending allegations are treated, taking into account the power imbalances and information asymmetries between undertakings and potentially injured parties. In parallel, reporting should not be confined to finalised proceedings alone: disclosures should enable stakeholders to understand whether the undertaking is identifying issues early, investigating them and taking action to address and remediate harms, rather than only reporting those cases that have already been formally confirmed.
  6. Caution against further reductions is warranted, as such reductions could undermine the integrity and meaningfulness of the standards and would not be in line with the level of ambition that the EU has committed to achieve. In this regard, it is imperative to keep in mind the revised personal scope of undertakings that will be bound to provide sustainability reporting under the adopted Omnibus. The CSRD scope is now limited to large undertakings (> 1 000 employees and > EUR 450 million turnover), meaning entities with capacity for robust internal data systems. Raising the level of ambition reflected in the simplified ESRS by requiring a higher degree of transparency from these undertakings would encourage other undertakings, not subject to these obligations, to apply this benchmark. This would generally contribute to promoting public accountability.
  7. Further guidance is needed for consistent and meaningful implementation, for example on assessing and evidencing whether incidents are ‘substantiated’; on applying the materiality filter in S1-16; on lawfully collecting and reporting data on persons with disabilities; and on implementing revised health and safety metrics following the deletion of certain indicators. Additional guidance would also be beneficial on adequate wage benchmarks, particularly to support comparability and reduce burdens associated with living wage calculations, and on how undertakings should contextualise disclosures where data points have been moved to the NMIG. Without such guidance, there is a risk that simplification could translate into under-reporting. Another suggestion to limit risks from the new simplified approach is to include a sunset clause for EFRAG to review certain revised DRs (e.g. on the employee headcount) in the Commission delegated act adopting the new ESRS. The timeline for such revision should consider the amendments now introduced to the CSRD.

FRA Opinion 4

In the context of adopting ‘Social Standards – S1 – Own workforce’ in the ESRS delegated act, the European Commission should have due regard to the following considerations.

  1. The current ‘non-employee’ framing is too narrow and risks under-capturing workers whose work is controlled by the undertaking. To prevent this risk, the delegated act should introduce a broader understanding of non-employees based on the undertaking’s control of their work. Alternatively, further examples of non-employees, such as apprentices, contractors, home workers, interns, subcontractors and volunteers should be included (S1 objectives, paragraphs 6 and 7).
  2. The revised adequate wage methodology anchored in ILO living wage principles is a meaningful improvement over reliance on statutory minima. The delegated act should retain the reliance on the ILO living wage framework as the appropriate benchmark to assess adequate wages for employees outside the EU (DR S1-9 and AR 20(b)). The European Commission, or EFRAG, should provide guidance on the disclosure of the application of the benchmark, in line with the requirement for undertakings to explain methodologies and sources for metrics under ESRS 2 GDR-M.
  3. Limiting gender pay gap reporting to an unadjusted aggregate figure weakens the standard’s capacity to reveal discrimination and systemic bias in pay structure. The delegated act should remedy this by complementing the disclosure on the unadjusted gender pay gap with a mandatory disclosure of the adjusted gender pay gap (DR S1-15, paragraph 40).
  4. Removing gender disaggregation across key workforce metrics obscures gendered vulnerability and weakens visibility of structural inequality. The delegated act should reinstate the mandatory gender breakdowns: non-guaranteed-hours employees (S1-5, paragraph 19(iii)(b)), percentage of participation in performance and career development reviews and average hours of training (S1-12, paragraph 34(a) and (b)), and percentage of employees entitled to family-related leave who actually took such leave (S1-14, former paragraph 93(b)).
  5. Replacing ‘parental leave’ with ‘maternity leave’ narrows the lens and risks rendering broader parental entitlements and fathers’ leave invisible. The delegated act should reinstate the reference to parental leave – replacing the narrower reference to maternity leave – or, at least, the reference to paternity leave should be included (S1-10, paragraph 30(d)).
  6. Requiring disclosure only of ‘substantiated’ incidents – without a definition in mandatory text – creates ambiguity and may exclude credible allegations still under investigation. The delegated act should remove the requirement to report only ‘substantiated’ incidents or, at least, the European Commission or EFRAG should provide further guidance as to what incidents are considered to meet the substantiation threshold.
  7. Deleting the absolute number of employees who have left reduces contextual understanding of workforce churn despite low reporting burden. The delegated act should reinstate the obligation to disclose the absolute number of employees who have left the company (S1-5, former paragraph 50(c)). The former voluntary data point on non-employees as part of the NMIG should be included (S1-6, former paragraph 56).
  8. Excluding retirement from social protection life events reduces attention to older worker vulnerability and is not aligned with protection in old age. The delegated act should reinstate retirement as one of the life events covered by social protection (S1-10, former paragraph 74(e)). The obligation to disclose the distribution of employees per age group should be reinstated (S1-8, former paragraph 66(b)).
  9. Aggregating and deleting key fatality indicators reduces transparency on the nature and scale of occupational harms and weakens comparability of OSH performance across undertakings. The delegated act should reinstate the obligation to report separately the number of fatalities from recordable work-related accidents and those resulting from recordable work-related ill health (S1-13, paragraph 36(b)). The data point on the days lost to fatalities should be reinstated (S1-13, former paragraph 88(e)). The obligation to report on fatalities due to work-related ill health among non-employees should be reinstated (S1-13, paragraph 88(b)).
  10. Moving leave uptake and practical supports out of mandatory reporting reduces visibility of whether workers can exercise family-related leave in practice and whether workplaces enable work–family balance. The delegated act should reinstate the obligation to report on the percentage of employees entitled to family-related leave who actually took such leave (S1-15, former paragraph 93(b)). Other metrics on work–life balance, such as flexible working time and access to daycare facilities, should be included in the NMIG.
  11. Weakening disability reporting would undermine transparency on inclusion, while unclear lawful collection expectations risk inconsistent practice and under-reporting. The data point on the percentage of persons with disabilities should be retained (S1-11, paragraph 32). The European Commission or EFRAG should provide guidance on the legal requirements applicable to the collection of data on persons with disability (AR 21).


3.3. S2 – Workers in the Value Chain, S3 – Affected Communities, and S4 – Consumers and End-users


Human rights impact and legal analysis

  1. The specific amendments in S2, S3 and S4 produce no significant human rights impacts, although several positive and negative aspects of their revision merit attention.
  2. In S2, the definition of value chain – while generally aligned with the CSDDD and the UNGPs interpretative guide – uses different terms and slightly varied wording that may create ambiguity and impair interoperability.

Definition: value chain

Under the ESRS, the value chain refers to ‘the full range of activities, resources and relationships related to the undertaking’s business model and the external environment in which it operates’.

As the value chain covers both upstream and downstream actors, workers in the value chain may be impacted by the undertaking without having any contractual relationship.

Note that EFRAG’s draft simplified ESRS have retained the definition adopted in 2023.

Source: EFRAG, Annex II – Acronyms and Glossary of Terms, EFRAG, Brussels, 2025; Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34/EU of the European Parliament and of the Council as regards sustainability reporting standards.

  1. S2-1 positively retains explicit policy coverage of forced labour, child labour and trafficking, maintaining alignment with international and European legal standards [94] International Covenant on Civil and Political Rights, Article 8; International Covenant on Economic, Social and Cultural Rights, Article 10(3); ILO Convention No 29 – Forced Labour; ILO Convention No 105 – Abolition of Forced Labour; ILO Convention No 138 – Minimum Age Convention; ILO Convention No 182 – Worst Forms of Child Labour; European Convention of Human Rights, Article 4; Charter of Fundamental Rights of the European Union, Articles 5 and 32; Regulation (EU) 2024/3015 of the European Parliament and of the Council of 27 November 2024 on prohibiting products made with forced labour on the Union market and amending Directive (EU) 2019/1937 (OJ L, 2024/3015, 12.12.2024, ELI: http://data.europa.eu/eli/reg/2024/3015/oj).
    . Requiring undertakings to explicitly state whether their policies in relation to workers in the value chain address forced labour directly supports the Forced Labour Regulation (Regulation (EU) 2024/3015 [95] Regulation (EU) 2024/3015 of the European Parliament and of the Council of 27 November 2024 on prohibiting products made with forced labour on the Union market and amending Directive (EU) 2019/1937 (OJ L, 2024/3015, 12.12.2024, ELI: http://data.europa.eu/eli/reg/2024/3015/oj).
    , which prohibits companies from placing and making available products made using forced labour on the EU market. This covers any use of forced labour at any stage of production, manufacture, harvest, extraction or processing, meaning, affecting workers along the value chain.
  2. Nevertheless, the draft simplified ESRS have deleted the obligation to disclose other relevant information on forced-labour risks. This may include, for example, information on any geographies or commodities for which there is a significant risk of forced labour among value chain workers, previously in S2, paragraph 11(b); widespread or systematic material negative impacts in specific contexts, exemplified by forced labour in particular commodity supply chains in specific countries or regions, previously listed in S2, paragraph 11(c); and the consideration of reputational risks where value chain workers are found to be subject to forced labour, as per the former AR 40. This dilution of the topical information undermines its objectives. The information reported by undertakings may be relevant to both identifying risks of forced labour and supporting investigations under the regulation. Therefore, the deleted content should be restored in the NMIG to maintain transparency without reinstating mandatory disclosures.
  3. S3 reveals particular strengths in indigenous rights protection. The explicit reference to the UN Declaration on the Rights of Indigenous Peoples clarifies applicable standards, including indigenous people’s right to the lands, territories or resources traditionally owned, occupied or otherwise used or acquired (Article 26) and the prohibition on forcible removal from their lands and territories, with relocation requiring their free, prior and informed consent (FPIC) and just compensation (Article 10). The retention of FPIC in S3-2 remains a core procedural safeguard of corporate due diligence with respect to indigenous peoples.
  4. The possibility now established in DR-3 of all social standards except S1 – allowing undertakings to aggregate human rights incidents rather than list them individually – is concerning from a human rights perspective. The change suggests a different expected level of granularity. However, undertakings are only required to report on these standards if the impact on these groups is material. The incidence of human rights incidents is a particularly relevant indicator of materiality. If an undertaking reports on these standards, it should disclose incidents with the same degree of detail as in S1 – which, as mentioned above, may already be considered insufficient. The current formulation is likely to raise further doubts, since the draft S1 requires only the number of incidents (not a list thereof) [96] This seems to be the point on the reservation raised by a Sustainability Reporting Board member: EFRAG, Basis for Conclusions: Draft amended ESRS – December 2025, Brussels, 2025, pp. 94–95, paragraph 462.
    . Considering the specificities of the groups in S2, S3 and S4, undertakings should provide even more detailed data in these cases. Therefore, requiring undertakings to list the incidents would be a better approach.

Conclusions

  1. Amendments to S2, S3 and S4 have been significantly streamlined, and, while the reduced data points simplify reporting and reduce the burden – a change generally welcomed by businesses – EFRAG’s prior report on the implementation of the ESRS indicates that a growing number of undertakings already disclose information on affected communities as a material topic, often using entity-specific metrics beyond minimum DRs. The same trend applies to consumer-related disclosures, which are increasingly structured, expansive and supported by entity-specific metrics to demonstrate impacts from products, services or brand platforms [97] EFRAG (2025), State of play 2025 - Implementation of European Sustainability Reporting Standards (ESRS): Observed Practices based on statements issued as of April 20, 2025.
    . The implementation of the revised ESRS should thus be closely monitored to assess whether undertakings are actually retracting from these beneficial practices.
  2. Notwithstanding the above, the amendments to S2 (workers in the value chain), S3 (affected communities) and S4 (consumers and end-users) streamline disclosures but risk omitting key human rights details. Aggregation in DR-3 (except S1) reduces granularity on incidents like forced labour and community displacement, potentially obscuring severity for vulnerable groups. Entity-specific metrics on impacts – already growing per EFRAG’s 2025 report – are not reinforced, allowing retraction from voluntary best practices. As such, the recommendation is to delete the option for undertakings to aggregate human rights incidents and instead require them to list each incident individually.

FRA Opinion 5

In the context of adopting the ‘Social Standards – S2 – Workers in the Value Chain, S3 – Affected Communities, and S4 – Consumers and End-users’ in the ESRS delegated act, the European Commission should have due regard to the following considerations.

  1. Deleting the former S2 forced-labour risk disclosures undermines the transparency needed to identify and address forced-labour risks in value chains and may dilute the objectives of the Forced Labour Regulation. The European Commission should provide, or request that EFRAG provide, specific guidance on identifying and disclosing forced-labour risks in value chains, including geographical/commodity hotspots and systemic impacts.
  2. Allowing the aggregation of human rights incidents in DR-3 for S2–S4 reduces incident-level granularity and may obscure severity and materiality for vulnerable groups. The delegated act should delete the option for undertakings to aggregate human rights incidents, requiring undertakings to list incidents individually rather than reporting combined totals.
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