This page was reviewed and updated on 25/07/25.
The European Commission has confirmed a two-year delay to several new Corporate Sustainability Reporting Directive (CSRD) requirements, as part of wider reforms, known as the ‘Omnibus I package’, to ease the regulatory burden on businesses.
The changes mean that large companies already reporting under the CSRD (known as ‘wave one’ companies) will not need to introduce additional disclosures that were originally scheduled for the second and third years of reporting.
What’s changing?
The CSRD came into effect in January 2024 for large public-interest companies with over 500 employees, with the first reports due in 2025. The scope was due to extend to companies with more than 250 employees in 2026, and listed SMEs in 2027.
However, in response to concerns over reporting burdens from industry, the Commission has adopted a set of “quick fix” amendments to the European Sustainability Reporting Standards (ESRS) that delay new disclosure requirements for wave one companies.
Under the changes:
- All wave one companies can delay reporting the anticipated financial effects of certain sustainability‑related risks, initially slated for next year, for another two years.
- Companies with fewer than 750 employees can omit disclosures on areas such as Scope 3 emissions, biodiversity and ecosystems, value chain workers, affected communities and consumers until the 2026 financial year.
- Larger companies will also benefit from delays in most of these areas, though they must still report Scope 3 emissions.
Smaller companies that were due to start reporting in 2026 and 2027 will also be affected. A ‘stop-the-clock’ directive has paused their entry into the regime while the Commission reviews the CSRD as part of its broader Omnibus reform package.
A wider review underway
The amendments come as the European Commission undertakes a major review of corporate sustainability legislation, including the CSRD. One proposal is to raise the reporting threshold to companies with over 1,000 employees, which could significantly reduce the number of companies in scope.
For companies that remain within the framework, the volume of required disclosures is expected to fall. The European Financial Reporting Advisory Group (EFRAG), which advises the Commission, has been tasked with cutting the number of CSRD data points by around two-thirds.
The Commission expects to complete its review of the ESRS by 2027.
Ombudsman raises concerns
Meanwhile, the EU Ombudsman Teresa Anjinho has launched an inquiry into the Commission’s handling of the Omnibus proposal. In a letter to Commission President Ursula von der Leyen, the Ombudsman raised concerns that the Commission did not follow required procedures when preparing the proposals.
The letter questions why no full impact assessment, public consultation or climate consistency check was carried out, all standard steps under the EU’s Better Regulation Guidelines and European Climate Law.
It also highlights that the internal review of the proposal was limited to 24 hours over a weekend, rather than the usual ten-day consultation period. The Commission has been asked to respond to the inquiry by 15 September 2025.
What does this mean for businesses?
The delay offers short-term relief for companies that were preparing to introduce new sustainability disclosures in the next two years. However, the broader review means that future requirements remain uncertain.
For now, wave one companies can make use of the new deferrals, while those due to start reporting in 2026 or 2027 will need to wait for further guidance from the Commission.
We’ll continue to monitor developments and provide updates as more information becomes available.
