CSRD update: “quick fix” offers breathing space for Wave 1 companies

Context

Wave 1 companies – large public interest entities with more than 500 employees – remain the first group required to report under the Corporate Sustainability Reporting Directive (CSRD), starting in 2025 for the 2024 financial year (FY). But unlike Waves 2 and 3, Wave 1 companies were not covered by the “Stop-the-Clock” Directive adopted in April 2025, which postponed CSRD obligations by two years for other undertakings.

This placed early reporters in an uncertain and more burdensome position. At the same time, the EU’s Omnibus Package and various communications – including the Draghi Report – emphasised the need for simplification and burden reduction in EU regulation, including sustainability reporting.

Importantly, while the Delegated Act is directly applicable and does not require implementation, Wave 1 companies will still need to report in 2025 and 2026, subject to national implementation of the broader CSRD obligations. For more information, see our latest Eyes on ESG update.

Quick fix Delegated Act: what’s changing for Wave 1

On 11 July 2025, the EU Commission published the “quick fix” Delegated Act to provide temporary relief for Wave 1 companies.

Key takeaways:

• Harmonised two-year phase-in relief for all Wave 1 companies: companies with more than 750 employees will now benefit from the same transitional reliefs that were previously available only to smaller undertakings. This includes deferral of additional disclosure requirements for FY2025 and FY2026, ensuring that companies are not required to report more in their second and third reporting years than in the first. In particular, all Wave 1 companies may now omit disclosures under ESRS E4 (biodiversity), S2 (workers in the value chain), S3 (affected communities) and S4 (consumers and end-users) for FY2025 and FY2026, previously only permitted for undertakings with up to 750 employees. However, where any of these topics are deemed material, companies must still report certain summarised information.
• S1 enhanced flexibility: companies with up to 750 employees may also omit all the information under ESRS S1 (own workforce) in FY2025 and FY2026, whilst companies with more than 750 employees may omit certain information under ESRS S1 (e.g. characteristics of non-employees, collective bargaining coverage, training and skills development, work-life balance) in the same two-year period.
• No need to disclose anticipated financial effects of IROs: the quick fix freezes the obligation to disclose financial effects under multiple datapoints (e.g. SBM-3, E1-9, E2-6) for two more years.
• No new disclosures in 2025/2026: companies will not be required to add any new reporting elements beyond what was already required in FY2024.

You can access the summary of modifications made available by the EU Commission here.

Why it matters

This quick fix provides partial alignment between Wave 1 and subsequent waves, reducing some of the immediate reporting pressures. It also gives companies more time to build up capabilities, mature their governance and adjust systems, without sacrificing transparency or momentum.

Importantly, the quick fix preserves reporting continuity while acknowledging the upcoming revision and simplification of the full set of ESRS, expected by early 2026.

What companies should do now

Despite the relief, Wave 1 companies should stay on course with their CSRD readiness work. The initial disclosures still demand, among others, robust double materiality assessments, strong ESG governance and oversight, and integration of data and assurance systems. Proactively embracing the CSRD now helps companies meet growing market expectations, respond to value chain pressures and future-proof their sustainability strategies.

Author: Rocco Mezzatesta