On July 11, the European Commission adopted “quick fix” amendments for phase-in disclosure requirements in ESRS Set 1 for Wave 1 companies that started ESRS reporting for financial year 2024, and were not covered by the “Stop-the-clock” Directive.
This amendment ensures these companies won’t need to report additional information for financial years 2025 and 2026 compared to 2024, while awaiting the adoption of ESRS simplifications and Omnibus proposals.
All Wave 1 companies are now allowed to omit the following requirements for FY 2025 and 2026:
Phase-in topical standards
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- E4: Biodiversity and ecosystems
- S2: Value Chain Workers
- S3: Affected Communities
- S4: Consumers and End-Users
Phase-in datapoints
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- Anticipated financial effects from risks and opportunities → SBM-3/ E1-9/ E2-6/ E3-5/ E4-6/ E5-6
- Except for the information prescribed by paragraph 40 (b) (E2-6) on the operating and capital expenditures occurred in the reporting period in conjunction with major incidents and deposits
- E1-6: Data points on Gross Scopes 3 and Total GHG emissions
- S1-7: Characteristics of non-employee workers in the undertaking’s own workforce
- S1-14: Data points on health and safety for non-employees
- S1-8: Collective bargaining coverage and social dialogue with regard to its own employees in non-EEA countries
- S1-11 to 13: Social Protection, Percentage of employees with disabilities, Training and Skills Development
- S1-14 : Data points on cases of work-related ill-health and on number of days lost to injuries, accidents, fatalities and work-related ill health
- S1-15 : Work-life balance
- Anticipated financial effects from risks and opportunities → SBM-3/ E1-9/ E2-6/ E3-5/ E4-6/ E5-6
However, wave 1 companies that use the temporary exemptions for a complete topical standard must nevertheless report certain summarised information on the topic concerned if they conclude that the topic in question is material, as required by ESRS 2 paragraph 17:
If an undertaking or group … decides to omit the information required by E4, S1, S2, S3 or S4…, it shall nevertheless disclose whether the sustainability topics covered respectively by E4, S1, S2, S3 and S4 have been assessed to be material as a result of the undertaking’s materiality assessment.
In addition, if one or more of these topics has been assessed to be material, the undertaking shall, for each material topic:
- disclose the list of matters (i.e. topic, sub-topic or sub-sub-topic) in AR 16 ESRS 1 Appendix A that are assessed to be material and briefly describe how the undertaking’s business model and strategy take account of the impacts of the undertaking related to those matters. The undertaking may identify the matter at the level of topic, sub-topic or sub-sub-topic
- briefly describe any time-bound targets it has set related to the matters in question, the progress it has made towards achieving those targets, and whether its targets related to biodiversity and ecosystems are based on conclusive scientific evidence
- briefly describe its policies in relation to the matters in question
- briefly describe actions it has taken to identify, monitor, prevent, mitigate, remediate or bring an end to actual or potential adverse impacts related to the matters in question, and the result of such actions
- disclose metrics relevant to the matters in question.
Therefore, in practice, this means that if your company has already disclosed on the topical standards E4 and S2-S4, you may as well continue to disclose in the same format, instead of moving the information to ESRS 2 paragraph 17.
Meanwhile, the Commission (together with EFRAG) is working on a broader revision of the ESRS that is expected to be completed by financial year 2027.
(A word of caution, there are small errors in the Commission’s summary of modifications table: for E4, S2, S3 and S4, it should read FYs 2025 and 2026 and not FYs 2025 and 2025.)
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This Regulation shall enter into force on the third day following that of its publication in the Official Journal of the EU and shall apply with respect to financial years beginning on or after 1 January 2025. This Regulation shall be binding in its entirety and directly applicable in all Member States.
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