On 11 July 2025, the European Commission adopted amendments to the European Sustainability Reporting Standards (ESRS), offering transitional relief for first-wave, large publicly listed companies. This development is significant, as these companies were not covered by the previous “stop-the-clock” measure, leaving them with full reporting obligations from the outset.
Background
The Corporate Sustainability Reporting Directive (CSRD), in effect since 2023, requires large companies to disclose comprehensive sustainability information aligned with the ESRS. While essential for transparency and accountability, the new standards impose a substantial administrative and operational burden on reporting entities. The Commission’s objective is to alleviate reporting obligations, particularly for smaller entities within the first-wave cohort, and to ensure a smoother operationalization of the reporting framework.
Scope of the Relief
The new delegated act applies to first-wave companies:
- Publicly listed entities with 500 or more employees
- Companies that commenced ESRS reporting on or after 1 January 2024
- Companies with up to 750 employees, and in some cases, companies exceeding 750 employees
Key Relief Measures
For companies with fewer than 750 employees:
- Certain reporting exemptions introduced in 2024 can now be extended to 2025 and 2026. The relief primarily affects reporting obligations under:
- Scope 3 and total greenhouse gas (GHG) emissions
- ESRS E4 – Biodiversity and ecosystems
- ESRS S1 – Own workforce
- ESRS S2 – Workers in the supply chain
- ESRS S3 – Affected communities
- ESRS S4 – Consumers and end-users
For companies with more than 750 employees:
- For 2025 and 2026 reporting periods, companies may omit full data requirements for ESRS E4, S2, S3, S4, and certain elements of S1.
Important caveat: The relief does not apply to periods starting before 1 January 2025. Companies with a 2024 business year ending in 2025 must still comply fully with the original reporting requirements.
Practical Implications
The transitional relief provides first-wave companies with several benefits:
- Time and resource savings, allowing for a more gradual implementation of ESRS reporting
- Opportunity to fine-tune sustainability reporting systems amid ongoing ESRS reviews
- Increased focus on material sustainability objectives, rather than purely administrative compliance
However, the relief may introduce practical complexities for companies with non-calendar fiscal years, as full compliance may still be required for one business year before transitional exemptions take effect.
Strategic Considerations
For companies impacted by the relief, the following actions are advisable:
- Review reporting systems to identify where transitional exemptions apply
- Adjust internal processes to account for phased data collection and reporting
- Ensure governance and audit procedures align with the updated ESRS requirements
- Monitor ongoing ESRS revisions and prepare for compliance with full standards in subsequent periods
Conclusion
The European Commission’s “quick fix” demonstrates a clear policy intent: reduce administrative burden, focus on material sustainability outcomes, and facilitate a smoother transition into ESRS reporting. For first-wave companies, it provides breathing space to refine internal reporting frameworks, enhance data quality, and maintain compliance while prioritizing meaningful sustainability performance.
At Katona & Partners Law Firm, we advise clients on navigating ESRS requirements, implementing transitional relief strategies, and managing sustainability reporting risks. Our team supports companies in aligning their governance, reporting, and audit processes with both the letter and the spirit of the CSRD and ESRS framework.
📩 Contact us to ensure your company maximizes the benefits of the new transitional provisions while maintaining robust and compliant sustainability reporting practices.
Katona & Partners Law Firm
(Katona & Partner Rechtsanwaltssozietät / Attorneys’ Association)
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Tel.: +36 1 225 25 30
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g.katona@katonalaw.com
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