Reporting on sustainability is complex, especially for organizations that fall under the CSRD. The European Commission is therefore temporarily easing a number of obligations. This measure gives companies that have been required to report since 2024 extra time to get their ESG reporting process in order.
CSRD in a nutshell
The Corporate Sustainable Reporting Directive (CSRD) is European legislation that requires companies to report on their impact on people, the environment, and society. The directive has been in force since January 2024 and is an extension of the existing Non-Financial Reporting Directive (NFRD).
Companies fall under the CSRD if they meet at least two of these three criteria:
- 250 employees or more;
- An annual turnover of more than 40 million euros;
- A balance sheet total exceeding 20 million euros.
Take a breather, or perhaps not?
The easing applies to so-called wave-one companies: organisations that have been required to report under the CSRD since the 2024 financial year. They do not need to provide any additional information for 2025 and 2026 compared to 2024.
Larger companies with more than 750 employees will also temporarily benefit from the same phase-in measures as smaller companies. This means that they may defer certain reporting requirements, such as:
- Scope 3 emissions (indirect emissions in the chain)
- Biodiversity and ecosystems
- Employees in the value chain
- Consumers and end users
For these components, reporting remains optional for the time being.
Why this quick fix?
The European Commission recognises that many organisations are struggling with the volume and complexity of data requirements. Issues such as chain transparency and indirect emissions require insights that are often not yet fully available.
Previously, companies that are not required to report until 2025 or 2026 (waves two and three) were already given two extra years of preparation time through the โstop-the-clockโ measure. With this quick fix, that relief now also applies to wave one.
In addition, the Commission is working on a broader revision of the reporting standards (ESRS), with the aim of simplifying them and bringing them more into line with other European regulations. This revision is expected to take effect from 2027.
Read the European Commission's press release here
What does this mean for your organization?
Are you part of wave one? Then you do not need to report any additional information for the time being. This gives you room to improve internal processes and structure data flows. Are you part of wave two or three? Then the previous postponement remains in force. The first CSRD reporting obligation will only take effect from the 2026 or 2028 financial year, depending on the size and type of organization.
Please note: this is temporary. The CSRD remains in effect and the underlying standards continue to evolve. The requirements are being eased, but they are not disappearing.
