Sustainability Reporting & ESG
TRANSPOSITION OF “STOP-THE-CLOCK” DIRECTIVE
The European Union (Corporate Sustainability Reporting) Regulations 2025 implement the two-year deferral of CSRD reporting obligations for “wave 2” and “wave 3” companies, in accordance with the “stop-the-clock” directive.
The regulations also address anomalies in the original Irish transposing legislation. For further details, please see our update: Ireland Transposes ‘Stop-the-Clock’ Directive and Clarifies CSRD Scope - Arthur Cox LLP.
REVISED DRAFT ESRS PUBLISHED
EFRAG has published revised ESRS Exposure Drafts for public consultation. According to EFRAG's press release, the revised drafts provide for a 57% reduction in datapoints. Each of the 12 Exposure Drafts is accompanied by a "log of amendments". The consultation closes on 29 September 2025 and EFRAG is due to deliver its final technical advice to the Commission by 30 November 2025.
ESRS “QUICK FIX” FOR WAVE ONE COMPANIES
The European Commission has adopted the ESRS “Quick Fix” Delegated Act, removing the obligation for “wave 1” companies to report additional information for financial years 2025 and 2026 and extending certain phase-in reliefs, previously only available to companies with less than 750 employees, to all “wave 1” reporting companies. The delegated act will apply for financial years beginning on or after 1 January 2025. More information is set out in the summary of the ESRS modifications.
Separately, EFRAG launched an ESRS Statistics and Report portal, presenting insights from early implementation of the ESRS.
VSME
The European Commission has adopted a recommendation presenting a voluntary sustainability reporting standard (VSME) for SMEs that are not within scope of CSRD. The VSME aims to help SMEs respond to sustainability information requests from large companies and financial institutions. As part of the Omnibus proposals, the Commission plans to adopt a voluntary reporting standard for companies with up to 1,000 employees based on the VSME.
OMNIBUS AMENDMENTS TO CSRD AND CSDDD
Negotiations between the EU institutions on substantive amendments to the CSRD and CSDDD, including regarding the scope and value chain requirements, are expected to commence this autumn. The Council adopted its negotiating mandate on the proposed amendments in June and the European Parliament is expected to agree its negotiating position in October.
SIMPLIFICATION OF TAXONOMY REPORTING
The European Commission has adopted a Delegated Act to simplify Article 8 Taxonomy disclosure requirements, including the introduction of a materiality threshold. The amendments will apply to reports published from 1 January 2026 for companies already within the scope of the Taxonomy regime. Further information is available in our recent update: EU Taxonomy: Simplification Measures Adopted - Arthur Cox LLP.
The Commission is launching a comprehensive review of Taxonomy reporting requirements and the technical screening criteria, including the “do no significant harm” criteria.
UK SUSTAINABILITY REPORTING FRAMEWORK
The UK Government is currently consulting on draft UK Sustainability Reporting Standards, based on the ISSB standards, alongside consultations on climate transition plans and oversight of sustainability assurance providers, representing the first step in developing a UK sustainability reporting framework.
SUSTAINABILITY REPORTING HUB
Our Sustainability Reporting Hub is a resource containing legislation and guidance for the CSRD, EU Taxonomy Regulation and the CSDDD.