The CSRD Quick Fix: Simplifying Reporting, Seizing Opportunities

The CSRD Snapshot 

On July 11th of this year, the European Commission brought a breath of fresh air to the CSRD landscape. Its "quick fix" to the ESRS (European Sustainability Reporting Standards) eases the burden on "first wave" companies—those reporting from 2024 onwards—offering them a temporary reprieve on certain detailed disclosures for 2025 and 2026. 

Beyond this immediate relief, it's a major strategic opportunity for all companies. It encourages us to optimize our data collection systems and align our sustainability strategies with the evolving CSRD framework, anticipating the potentially broader revision of the ESRS in 2027. 

Background and Necessity of the "Quick Fix" 

The CSRD came into force on January 5, 2023, requiring companies to publish sustainability information in accordance with the ESRS. The ESRS were implemented in phases, but "first wave" companies did not benefit from the two year postponement introduced by the "stop the clock" directive. To avoid a disproportionate burden and "stranded investments"  for early adopters, the European Commission introduced the "quick fix". This aims to "freeze" additional, more detailed ESRS reporting requirements for first wave companies for fiscal years 2025 and 2026, until fiscal year 2027. This measure seeks to alleviate the burden, increase certainty, and adapt to future broader ESRS revisions. 

CSRD Implementation: Key Timeline and Company Waves 

The CSRD is being implemented in phases and is expected to affect over 50,000 companies in Europe. 

• First Wave Companies (reporting in 2025, for FY 2024). These are primarily large public interest entities already subject to the NFRD (Non Financial Reporting Directive), such as listed companies, banks, and insurance companies, employing over 750 people. 

• Second Wave Companies (reporting in 2028, for FY 2027). Other large EU companies, meeting at least two of the following three criteria: over 250 employees, over €50 million net turnover, or over €25 million in total assets. The reporting obligation was postponed by two years due to the "stop the clock" directive. 

• Third Wave Companies (reporting in 2029, for FY 2028). EU listed SMEs and certain financial institutions, meeting at least two of the following three criteria: net turnover equal to or greater than €900,000, assets equal to or greater than €450,000, or workforce equal to or greater than 10 people. The reporting obligation was also postponed by two years. Listed SMEs may choose to postpone until 2028. 

• Non-EU Companies (reporting in 2029, for FY 2028). Companies with annual EU revenue exceeding €150 million for two consecutive fiscal years, and which have a large EU subsidiary, an EU subsidiary with securities listed on an EU regulated market, or an EU branch with net turnover exceeding €40 million. The extraterritorial impact of the CSRD underscores the EU's ambition in global sustainability standards. 

Impact of the "Quick Fix" on Reporting Requirements 

The "quick fix" has effectively "froze" the expansion of ESRS reporting requirements for "first wave" companies. For fiscal years 2025 and 2026, these companies will not have to publish additional detailed information, particularly concerning ESRS E1-E5 (climate change, pollution, water, biodiversity, circular economy) and certain social indicators. These requirements will be postponed until fiscal year 2027. This measure aims to prevent companies from incurring unnecessary reporting burdens or stranded investments due to broader ESRS revisions to come. It encourages first wave companies to consolidate their basic reporting processes, such as ESRS 1 and ESRS 2, and offers them a breathing space to develop robust data collection systems. 

Implications and Regulatory Outlook 

The "quick fix" and the "stop the clock" postponement mark an evolution in the EU's approach, responding to concerns about regulatory burden. This is a strategic opportunity for all companies to strengthen their ESG foundations, optimize their data systems, and integrate ESG for a competitive advantage. The European Commission is actively revising the ESRS to reduce requirements and clarify provisions, with finalization expected by fiscal year 2027. Sector specific guidelines are postponed to 2026. The CSRD remains binding EU law, regardless of national transposition. These adjustments reveal a dynamic CSRD framework, aiming for effective regulation and transforming sustainability reporting into a catalyst for value. 

CSRD Reporting Framework: The Pillars 

The CSRD framework is built on key principles. It mandates "double materiality": disclosing both financial risks related to sustainability and the company's impact on the environment and society. Reports must be standardized, digital, and mandatorily include ESRS 1 and 2, as well as material ESG topics (ESRS E1-E5, GHG emissions). "Limited third party assurance" is required, with integration into the annual management report. From 2025, a Paris Agreement aligned emissions reduction plan (net zero by 2050) is also required. The CSRD transforms reporting into a robust, verifiable process, aligning sustainability and financial performance. 

Strategic Recommendations for Compliance 

For CSRD, a proactive strategy is essential. "First wave" companies should consolidate their foundations thanks to the "quick fix". "Second and third wave" companies must use the delay to build a solid ESG base: assess double materiality, optimize data collection, train teams, and integrate sustainability into strategy. All must follow ESRS revisions and respect EU deadlines. The CSRD is a strategic opportunity for transparency and differentiation, requiring foresight and collaboration.

Aware of the challenges, our DT Carbon Master solutions aim to simplify ESG data collection, analysis, and reporting, helping your practices comply with the CSRD and transform sustainability into a competitive advantage. We hope to support you on this journey. 

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