This week EFRAG finalised work on the simplification of the ESRS. This post is not a summary of the main changes to the standard from the previous “Set 1” version (in place from 2023 until today), instead the purpose of this document is to provide clarity on what this means for reporting practice. The ESRS document itself now remains in “unapproved” status, awaiting confirmation and acceptance from the various EU political institutions. At the EFRAG conference on 4 December 2025, it was mentioned that the remaining political decision making might still take 4 to 6 months.
This means that some practice-adoption dilemmas present themselves:
- What should Wave-2 and other companies report against if they are already voluntarily adopting an ESRS report early (including those who have already started writing their reports against the “Set1” standard?
- What should Wave-1 companies report against, if their member state country has already passed the CSRD into local law?
- What should Wave-1 companies report against, if their member state country has not yet passed the CSRD into local law?
Just as we have done with other frameworks when new versions are released, Code Gaia is already adapting the ESRS reporting framework to the new version as well as updating all the sustainability “matters” over to the new “topics” as well as adjusting the relevant Materiality of Information mapping for IROs which were created under the old Set 1 list of topics. This means that transition from Set 1 version to the new reporting requirements should be a relatively seamless process in our software. There is then no technical reason why the DMA and/ or existing reporting content cannot be migrated to the new standard with relative ease. The dilemma regarding the appropriateness of migration is a slightly more problematic question. For each of the example cases above, here is Code Gaia’s advice:
Wave-1 companies where their member state country has already passed the CSRD into local law (such as Croatia):
Unless your report is already in the finalisation stages, Code Gaia recommends adopting the new version as soon as practicable but only after checking in with your auditor and potentially in-house legal counsel. It might be the case that they advise sticking with Set 1 until the preparation of the 2026 report begins, in order to avoid any compliance gaps. The Set 1 standard is likely still the legally specified version of the ESRS in your case. If, based on the above advice, you adopt the new ESRS version now, you can take advantage of Code Gaia’s migration process where relevant. This will merge existing reporting content from Set 1 into the new requirements A double check of the reporting requirements will likely be necessary given that some material IROs might move from being relevant for one topical standard to another (most likely for those that are related to the marine environment).
Wave-1 companies where their member state country did not yet pass the CSRD into local law (such as Germany):
Code Gaia recommends adopting the new version as soon as practicable. Taking advantage of our migration process where relevant. This will merge existing reporting content from Set 1 into the new requirements and can re-assign existing IROs from the old topics to the new topics. A double check of the reporting requirements will likely be necessary given that some material IROs might have now shifted to a new topical standard (especially if they relate to marine resources).
Wave-2 and other companies who are already voluntary adopting an ESRS report early:
Unless you expect to publish a voluntary Set 1 report prior to the end of February. Code Gaia recommends adopting the new version as soon as practicable. If you have not yet started DMA in particular, not much will change, you will be able to start identifying and assessing IROs, but against a slightly different grouping of topics to those that existed under Set 1. If you have already started DMA, or even started drafting your ESRS, you can take advantage of Code Gaia’s migration process where relevant. This will merge existing reporting content from Set 1 into the new requirements and can re-assign existing IROs to the new “topics”. A double check of the reporting requirements will likely be necessary given that some material IROs might have now shifted to a new topical standard (especially if they relate to marine resources) If, however, you are already in the final stages of drafting a Set 1 report voluntarily, the additional administrative burden of swapping versions late in the process might not bring much value and might delay your publication. In that case, proceeding with a Set 1 is recommended, then switching to the new ESRS version for the next reporting cycle.
Some resources for further reading on the main changes:
EFRAG release of new standard: https://www.efrag.org/en/news-and-calendar/news/efrag-provides-its-technical-advice-on-draft-simplified-esrs-to-the-european-commission
EFRAG new interactive ESRS knowledge hub link: https://www.efrag.org/en/news-and-calendar/news/efrag-launches-the-esrs-knowledge-hub-a-new-digital-gateway-to-sustainability-reporting
