The European Central Bank (ECB) has raised significant concerns about the impact of proposed revisions to the European Sustainability Reporting Standards (ESRS) under the EU’s Corporate Sustainability Reporting Directive (CSRD), warning that the simplification efforts may “significantly reduce transparency for investors and other market participants.”

In a recent staff opinion, the ECB highlighted that the simplification package — part of the EU’s Omnibus reform initiative — would reduce mandatory disclosures, eliminate voluntary data points, expand reliefs and phase-in flexibilities, and remove roughly 90 % of companies from the CSRD’s scope. These changes, the ECB argues, could weaken the availability, comparability, and decision-usefulness of sustainability information needed for assessing risks, allocating capital and maintaining financial stability.

The ECB staff flagged permanent relief provisions, extended phase-ins, and exemptions, particularly for financial institutions, as key areas where transparency may decline. It also noted that reduced climate and biodiversity disclosures could create “blind spots” for investors. While the revised ESRS show improved alignment with international standards in some aspects, the ECB warned that certain new reliefs go beyond global norms and may hinder the comparability of EU sustainability data.

To address these risks, the ECB recommends limiting permanent exemptions, shortening phase-in periods for quantitative disclosures, and ensuring that the revised standards maintain sufficient scope and quality of sustainability information for investors and risk managers.