The European Commission has announced a series of amendments to the European Sustainability Reporting Standards (ESRS), deferring the introduction of new requirements for large companies that are already reporting under the Corporate Sustainability Reporting Directive (CSRD). These amendments delay additional disclosures in areas such as biodiversity, workers in the value chain, and Scope 3 emissions.
This move comes amid a broader revision of the CSRD as part of the Commission’s Omnibus I package, which seeks to significantly reduce the sustainability reporting and regulatory burden on companies. The CSRD, based on the ESRS, initially introduced detailed reporting requirements concerning environmental impacts, human rights, social standards, and sustainability-related risks. The directive became effective in early 2024 for large public-interest companies with over 500 employees, with the first reports expected in 2025. It was set to extend to companies with more than 250 employees or €50 million in revenue the following year, and to listed SMEs a year later.
The Omnibus initiative, however, is likely to exclude many companies from the CSRD’s scope, with the Commission proposing to raise the threshold to companies with over 1,000 employees. Some lawmakers are advocating for even higher thresholds. The initiative is also expected to reduce the amount of information companies must report, with the European Financial Reporting Advisory Group (EFRAG) aiming to cut CSRD datapoints by approximately two-thirds.
The amendments effectively prevent companies that have already started reporting, known as “wave one” companies, from having to provide new disclosures originally planned for the second and third years of reporting. These may not be required at all once the CSRD revision is complete. Under the new amendments, wave one companies can delay reporting on the anticipated financial effects of certain sustainability-related risks, initially scheduled for next year, by another two years.
For wave one companies with fewer than 750 employees, the amendments extend the ability to omit reporting on Scope 3 greenhouse gas emissions, biodiversity and ecosystems, own workforce, workers in the value chain, affected communities, and consumers and end users until the financial year 2026.
Companies with more than 750 employees will receive most of the same phase-in provisions currently applicable to smaller firms, with delays in reporting on biodiversity and ecosystems, several “own workforce” topics, workers in the value chain, affected communities, and consumers and end users until FY 2026. However, Scope 3 emissions are not included in the list of disclosures that larger companies may omit.
For smaller companies set to begin reporting in 2026 and 2027, European lawmakers adopted a ‘stop-the-clock’ directive earlier this year to pause the implementation of CSRD disclosure requirements during the Omnibus process.
The Commission anticipates completing its review of the ESRS by the financial year 2027.
