As the foundation for an effective sustainability strategy and standards-compliant sustainability reporting, companies must identify the issues that are relevant or “material” to them. The first version of the ESRS prescribed a very complicated, bureaucratic process for this. The now simplified ESRS allow for a more balanced approach. Companies can make their work easier by keeping these simplifications in mind when revising or creating their “Double Materiality Assessment (DMA).”
The ESRS Simplification: from List Compliance to Information Materiality
With the 2023 ESRS, the European Commission had already established the Double Materiality Assessment (DMA) as a mandatory starting point for CSRD reporting: Companies must systematically assess both the impacts on society and the environment (impact materiality) and the resulting financial risks and opportunities (financial materiality). As part of the “Omnibus” package to simplify the CSRD and ESRS, the Commission tasked EFRAG with streamlining the existing standards and making them more practical. The drafts of the “simplified ESRS” published in November 2025 reflect this objective: They reduce the number of mandatory data points and shift the DMA logic from a detailed, procedural task to an analysis more clearly focused on the decision-relevance of the information. These drafts have since been revised by the European Commission and published on May 6 as the Revised ESRS, which are open for public comment for one month (until June 3, 2026). The Commission has not made any changes to the concept of materiality but has merely reemphasized the process streamlining measures described below.
How the DMA processes differ
In ESRS Version 1, which came into effect in 2023, the DMA is a comprehensive, systematic approach: Companies start with a long list of topics from ESRS 1 AR 16 (a total of 94 topics, subtopics, and sub-subtopics), identify potential impacts, risks, and opportunities (IROs) for each, and evaluate them along both axes of the dual materiality framework. This approach follows the so-called “bottom-up” approach. The ESRS also require a high level of documentation: The implementation of the process, the thresholds used, the role of stakeholders, and the rationale for individual materiality decisions must be described in detail to ensure the auditability of the DMA results.
The draft of the simplified ESRS introduces a shift here: The concept of dual materiality remains, but it is filtered more heavily through the principle of “information materiality”—that is, whether the disclosure of a piece of information is relevant to the decisions of investors and other stakeholders, and not merely whether it appears on the ESRS list of topics (currently: ESRS 1, Appendix A). In the new version, the list of topics is understood more as a guide rather than a mandatory starting point for reviewing all individual items (“bottom-up”). Instead, companies may choose a top-down approach and be guided by their business model, strategy, value chain, and known risk profiles to classify topics as “clearly material” or “clearly non-material.”
Furthermore, the DMA methodology is intended to streamline processes: The simplified ESRS emphasize that information on IROs and data points should be collected “without undue effort or cost,” and that qualitative, reasoned assessments are permissible. In addition, existing measures and policies may now also be considered in the assessment of impacts, risks, and opportunities—an approach that was often practiced in the past but was not provided for in the 2023 ESRS.
Another aspect of the simplified ESRS that affects the DMA itself to a lesser extent but gains relevance at the latest in the reporting is the quantification of financial materiality. Under ESRS 2 SBM-3, companies are now required not only to describe material impacts, risks, and opportunities qualitatively but also to quantify their potential financial effects, where possible. This brings ESRS reporting closer to established risk management processes and IFRS requirements, such as those regarding the disclosure of climate-related risks in financial reporting.
What the changes mean for your company
The new version is intended to enable existing risk, governance, and management processes to be integrated more closely into the DMA, rather than establishing a separate, time-consuming thematic review. The outcome of the DMA is now measured by the quality of the reasoning rather than the completeness of every detailed scoring table. However, the result remains a well-documented, transparent DMA that is clearly aligned with the business model, strategy, and value chain.
Next steps toward the adoption of the simplified ESRS
Following the aforementioned comment period, the European Commission will adopt the simplified ESRS as soon as possible. The European Parliament and the European Council will then have two months to lodge an objection1. If this does not occur, the simplified ESRS will enter into force upon the expiration of the objection period.
Conclusion: What needs to be done – and how the ESRS simplification supports Swiss and German companies
The ESRS simplification does not eliminate requirements but shifts the focus from formal red tape to clear decision-making logic. For companies in Switzerland and Germany, this results in concrete recommendations for action:
- Use the transition period to establish a DMA structure that is closely aligned with your business model, strategy, and governance, rather than first examining every ESRS issue in minute detail.
- The DMA serves as a foundation for paving the way toward ESRS. Start with an ESRS-compliant roadmap to test data and information systems and create an initial “mockup” or “ESRS Light” report.
In this way, the simplified ESRS rules can be viewed as an opportunity: they reduce unnecessary complexity, strengthen the link between sustainability and financial issues, and help companies prepare for the core requirements of European reporting.
1 The two-month objection period may be extended by an additional month at the request of Parliament or the Council.
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