The Commission’s Quick Fix? Freezing Additional ESRS Requirements for CSRD First-Wave Undertakings

Introduction 

On 26 February 2025, the European Commission published its ‘Omnibus I Initiative’ (Omnibus Initiative) aimed to “cut” the so-called “red tape” to boost competitiveness and foster a favourable business environment and ensure that companies are not stifled by an excessive regulatory burden. The Omnibus Initiative encompasses a two-track approach based on two separate, yet interlinked, legislative proposals (click here). The First Proposal, resulting in the so-called ‘Stop-the-Clock Directive’, was adopted on 3 April 2025. This caused, among other things, the postponement of the reporting requirements under the ‘Corporate Sustainability Reporting Directive’ (CSRD) for second- and third-wave in-scope companies until their FY 2027 at the earliest (see here for more details). 

Another element of the Omnibus initiative was the Commission’s announcement that it would ‘cut the red tape’, i.e. simplify the ‘European Sustainability Reporting Standards’ (ESRS) – Delegated Regulation 2023/2772 – for companies to which the CSRD was not yet applicable. Interestingly, the Omnibus Initiative did not aim to revise the ESRS for the first-wave companies (i.e. EU-based listed ‘large undertakings’), which became subject to the CSRD’s reporting obligation over their financial years from 2024 onwards. However, a leaked version of an amending draft Delegated Act (also known as the: “Quick Fix Proposal”) suggests that the Commission, additionally, intends to extend simplification of the ESRS for first-wave companies. The amendment is meant to apply retroactively from 1 January 2025, meaning that the reporting obligations for the second sustainability statements will be eased as their FY 2025 progresses.

This article discusses the proposed relaxation of the requirements for the so-called “wave-one” undertakings by the Quick Fix Proposal. 

Background – The CSRD

The CSRD entered into force on 5 January 2023, requiring undertakings in scope to report sustainability information according to mandatory ESRS. The first set of ESRS specifies that some of the reporting requirements are phased-in over time. The entry into effect of the reporting requirements introduced by the CSRD takes place in 3 waves for different categories of undertakings. 

• In the first wave, large public entities with more than 500 employees must report for the first time in 2025 for financial year 2024 (“wave-one” companies). 
• In the second wave, other large undertakings must report in 2026 over their financial year 2025 – this has now been postponed to the FY2027. 
• In the third wave, SMEs with securities listed in EU regulated markets must report in 2027 for financial year 2026, although they have a possibility to opt out of reporting for financial years 2026 and 2027 – this was postponed until FY 2028. 
• In the fourth wave, certain non-EU based ultimate parents of global groups that have significant business in the territory of the Union must report in 2029 for financial year 2028. This date was not postponed.

Notably, the Omnibus I package contains a second proposal to increase the thresholds for the scope of the 2nd to 4th waves of companies to the extent that – if adopted – the scope of application of CSRD will be reduced by roughly 80%. This proposal is currently pending in the legislative process of the EU institutions.

Revising the ESRS for wave-one undertakings - a Quick Fix

Rationale 

Under the existing phase-in provisions in ESRS, the wave-one undertakings would need to add more granular disclosures (to their first sustainability statements over FY 2024) in the subsequent two years — namely for FY 2025 and 2026. The Commission’s concern is that some of these wave-one companies may cease to be subject to reporting at all if, following the Second Omnibus Proposal, the CSRD thresholds are raised or, if still in scope, may soon operate under revised more simplified standards if the forthcoming ESRS overhaul is adopted.

The Quick Fix Proposal's amendment therefore specifically aims to solve these problems by effectively freezing the ESRS reporting requirements for wave one undertakings. By the time that the next wave of undertakings must report over financial year 2027, it is expected that the overall revision and simplification of ESRS will have been completed and that the Directive amending the substantive provisions of the CSRD, including the provisions setting out which undertakings are subject to the reporting requirements, will have entered into force. Furthermore, the Quick Fix Proposal addresses the situation where the undertakings might be required to report information and then later be exempted from reporting altogether. It also prevents situations where undertakings would need to adjust to additional reporting requirements that might be subsequently modified. This avoids the (existing) wave-one companies incurring the cost of preparing extensive new data sets for only one or two years, while it is uncertain whether this will be required from them going forward.

Freeze of the expanding ESRS requirements for wave-one companies?

Under the existing ESRS, certain reporting requirements are phased-in over time in the sense that these may be omitted from the first-year sustainability statement. These phased-in provisions are listed in Appendix C of Annex I ESRS. Furthermore, it must also be observed that some of these phase-in provisions apply to all wave-one undertakings falling within the scope of the CSRD, whereas other disclosure requirements only allow wave-one undertakings with less than 750 employees to temporarily omit the information covered by those disclosure requirements.

According to the leaked version of the Quick Fix Proposal, the European Commission proposes to amend the current phased-in ESRS laid down in Appendix C Annex I ESRS. Concretely, if this draft proposal is adopted, wave-one undertakings can delay reporting on these specific additional data points – for example, ESRS E1 (climate-related measures), E2 (pollution), E3 (water and marine resources), E4 (biodiversity), and E5 (circular economy), as well as additional key social indicators in ESRS S1–S4 – by 2 years. This means that these additional reporting requirements will be suspended until the financial year starting in 2027 (FY 2027). 

Particularly, the Quick Fix Proposal contains an overview of the ESRS standards and topics for which this suspension will be applicable:

Consequently, the Quick Fix Proposal delivers significant relief for wave-one undertakings by effectively freezing the imminent extension of their ESRS reporting requirements. This postponement prevents undertakings from implementing further disclosure requirements that might soon be modified under the revised and simplified ESRS, whilst protecting undertakings that may ultimately be excluded from the CSRD's scope (with the proposed 1000+ employee threshold) from unnecessary reporting burdens. For undertakings remaining in scope, this amendment provides substantial breathing room to develop robust data collection systems, allocate resources more effectively, and align their sustainability reporting strategy with the finalised regulatory framework expected to be in place by 2027. Undertakings can now take a more measured, cost-effective approach to CSRD implementation, focusing first on establishing solid foundations before expanding to more complex disclosures in the future. 

Conclusion

The Quick Fix Proposal's proposed amendments to the ESRS, as laid down in Delegated Regulation (EU) 2023/2772, support the important evolution in the EU’s approach to sustainability reporting set in motion by the Omnibus I Initiative. By postponing certain additional disclosure requirements for wave one undertakings until financial year 2027, the European Commission has demonstrated its responsiveness to concerns about regulatory burden while maintaining the CSRD reporting obligation for this group of wave one companies. 

As we look ahead to 2027, when these additional reporting requirements may come into effect, undertakings should use this extended preparation period wisely – building robust data collection systems, enhancing their sustainability governance, and meaningfully engaging with material sustainability issues. This measured approach will better serve the ultimate goals of transparency, accountability, and sustainable business practices across the European Union. 

Overall, the key takeaway is a two-year postponement of additional ESRS reporting obligations for undertakings in the first wave, aligning with the broader aim of simplifying the CSRD's architecture while giving companies time to adapt responsibly.