Commission adopts “quick-fix” Delegated Act to reduce the level of sustainability reporting required for “wave 1” companies for financial years 2025 and 2026

On 11 July 2025, the European Commission adopted a “quick-fix” Delegated Act to amend the reporting requirements set out in the European Sustainability Reporting Standards (ESRSs) under the Corporate Sustainability Reporting Directive (CSRD) for “wave 1” companies to help reduce the reporting burden on these companies for financial year (FY) 2025 and FY 2026.

Wave 1 companies were allowed to leave out certain information for their first year of reporting in 2025 (ie for FY 2024) but, without the changes now being proposed, additional information was required to be reported on for financial years 2025 and 2026.

The ESRSs had originally made those “wave 1” companies with more than 750 employees subject to more onerous reporting obligations than those companies with fewer than 750 employees in areas relating to biodiversity and ecosystems, workers in the value chain, affected communities and consumers and end users. However, if the Delegated Act is finalised and adopted without objection from the European Parliament and Council, all wave 1 companies (including those with more than 750 employees) will benefit from reduced reporting obligations and will not have to report on these ESRSs for FYs 2025 and 2026.

The Delegated Act is subject to a two-month scrutiny period by the European Parliament and Council (extendable by a further two months) before it can be finalised and published in the Official Journal of the EU unless the Parliament and Council confirm before the 2-month expiry date that they have no objections, in which case it could enter into force before mid-September.

The Delegated Act will apply for financial years beginning on or after 1 January 2025.

While the “Stop-the-Clock” Directive and the transposing Irish Corporate Sustainability Reporting (CSR) Regulations 2025 (which came into effect on 7 July 2025), referred to in our client briefing here, do not amend the reporting timeframe for the largest (“wave 1”) companies ie large public interest entities reporting in 2025 (for FY 2024), this Delegated Act, when finalised and brought into force, will provide some concessions and reduce the reporting burden for “wave 1” companies in 2026 (for FY 2005) and 2027 (for FY 2026).

Thanks to Tracy MacDevitt (Professional Support Lawyer, Corporate) for contributing to this briefing.