EC extends transitional reliefs in amendments to the ESRS for ‘wave one’ entities
EC extends transitional reliefs in amendments to the ESRS for ‘wave one’ entities
In July 2025, the European Commission (EC) adopted a targeted ‘quick-fix’ delegated act to amend the first set of European Sustainability Reporting Standards (ESRS), with the objective of easing the reporting burden for ‘wave one’ undertakings, which are the undertakings which were required to report for financial year 2024 under the Corporate Sustainability Reporting Directive (CSRD). These undertakings were not covered by the ‘stop-the-clock’ directive (EU 2025/794), which deferred reporting obligations for ‘wave two’ and ‘wave three’ entities to financial year 2027 and beyond.
The ‘quick-fix’ allows ‘wave one’ undertakings to omit certain disclosures for their second year of reporting in financial year 2025 starting on or after 1 January 2025, aligning their obligations more closely with those of smaller entities (under 750 employees) that benefit from phase-in reliefs. Specifically, undertakings may omit full disclosures under ESRS E4 (Biodiversity and ecosystems), S2 (Workers in the value chain), S3 (Affected communities), and S4 (Consumers and end-users), provided the topics are not deemed material. For ESRS S1 (Own workforce), a range of metrics—including data on non-employees, collective bargaining, social protection, disability inclusion, training, health and safety, and work-life balance, etc.—may be excluded for financial years 2024 through 2026. However, if any of these topics are assessed as material, undertakings must still provide summarised disclosures under ESRS 2 General Disclosures, paragraph 17.
However, based on the precise text of the legislation, application of the extended reliefs is not allowed for undertakings with a financial year starting before 1 January 2025. For example, those with their first financial year beginning on 1 July 2024 and ending on 30 June 2025 will not benefit from these reliefs in their first CSRD report as the ‘quick fix’ does not allow earlier application before reporting periods beginning on or after 1 January 2025. Consequently, undertakings with over 750 employees must disclose all the disclosure requirements from E4, S2, S3, and S4 in their first CSRD report, considering that according to the initial version of Appendix C of ESRS 1 General requirements the phase-in provisions are only applicable to undertakings with less than 750 employees.
‘Wave one’ undertakings with up to 750 employees have also received extended relief under the ESRS ‘quick-fix’ provisions. Initially permitted to omit disclosures of Scope 3 greenhouse gas (GHG) emissions and total GHG emissions for financial year 2024, these undertakings may now continue to exclude this information through financial years 2025 and 2026. Additionally, they are allowed to omit all disclosures under ESRS S1 (Own workforce) for the same three-year period.
The EC aims to perform a full review of the ESRS by financial year 2027, with the objective of reducing the number of data requirements, clarifying provisions deemed unclear and improving consistency with other pieces of legislation.
More details and the delegated act are available in the press release.
The ‘quick-fix’ allows ‘wave one’ undertakings to omit certain disclosures for their second year of reporting in financial year 2025 starting on or after 1 January 2025, aligning their obligations more closely with those of smaller entities (under 750 employees) that benefit from phase-in reliefs. Specifically, undertakings may omit full disclosures under ESRS E4 (Biodiversity and ecosystems), S2 (Workers in the value chain), S3 (Affected communities), and S4 (Consumers and end-users), provided the topics are not deemed material. For ESRS S1 (Own workforce), a range of metrics—including data on non-employees, collective bargaining, social protection, disability inclusion, training, health and safety, and work-life balance, etc.—may be excluded for financial years 2024 through 2026. However, if any of these topics are assessed as material, undertakings must still provide summarised disclosures under ESRS 2 General Disclosures, paragraph 17.
However, based on the precise text of the legislation, application of the extended reliefs is not allowed for undertakings with a financial year starting before 1 January 2025. For example, those with their first financial year beginning on 1 July 2024 and ending on 30 June 2025 will not benefit from these reliefs in their first CSRD report as the ‘quick fix’ does not allow earlier application before reporting periods beginning on or after 1 January 2025. Consequently, undertakings with over 750 employees must disclose all the disclosure requirements from E4, S2, S3, and S4 in their first CSRD report, considering that according to the initial version of Appendix C of ESRS 1 General requirements the phase-in provisions are only applicable to undertakings with less than 750 employees.
‘Wave one’ undertakings with up to 750 employees have also received extended relief under the ESRS ‘quick-fix’ provisions. Initially permitted to omit disclosures of Scope 3 greenhouse gas (GHG) emissions and total GHG emissions for financial year 2024, these undertakings may now continue to exclude this information through financial years 2025 and 2026. Additionally, they are allowed to omit all disclosures under ESRS S1 (Own workforce) for the same three-year period.
The EC aims to perform a full review of the ESRS by financial year 2027, with the objective of reducing the number of data requirements, clarifying provisions deemed unclear and improving consistency with other pieces of legislation.
More details and the delegated act are available in the press release.