What is the current CSRD scope after the Omnibus Package?

Following the July 2025 Omnibus reforms and April 2025 Stop-the-Clock Directive, the CSRD scope has been recalibrated. Wave 1: ~500–600 large companies already reporting under NFRD, now subject to ESRS 2.0. Wave 2: Companies with 250–1,000 employees now report from FY 2027 (previously 2025). Wave 3: Listed SMEs report from FY 2028 (previously 2026). Estimated total affected: 10,000–15,000 companies directly; 50,000–60,000 indirectly through supply chains.

How have the ESRS standards changed in December 2025?

EFRAG finalised simplified ESRS on 3 December 2025. Key changes: 61% reduction in mandatory data points; all voluntary disclosures removed; narrative requirements streamlined; proportionality principles embedded (estimates acceptable where cost/effort undue); phase-in periods extended through 2029 for value chain data and anticipated financial effects; enhanced interoperability with ISSB and GRI; fair presentation principle prioritised over metric volume.

Can I use estimates in my initial CSRD reporting?

Yes. The December 2025 ESRS 2.0 explicitly permits estimates where reasonable and supportable information is unavailable without undue cost or effort. This applies particularly to Scope 3 emissions, value chain data, and anticipated financial effects. Phase-in periods through 2029 provide graduated expectations—qualitative information often sufficient in year one; quantitative detail develops iteratively. However, estimates must be disclosed as such and their methodology explained for audit credibility.

What does 'Fair Presentation' mean in ESRS 2.0?

'Fair Presentation' shifts focus from exhaustive data collection to quality of reasoning and transparency. Companies must present information that is complete (nothing material omitted), accurate (based on reliable data), coherent (consistent with strategic disclosures and financial reporting), comparable (enabling stakeholder benchmarking), and understandable (with clear explanations of judgements made). Auditors scrutinise the narrative logic supporting materiality conclusions rather than metric volume.

How does materiality assessment differ under streamlined ESRS?

The streamlined approach prioritises strategic over exhaustive: (1) Top-down: Executive workshops identify 10–15 strategic priorities rather than comprehensive topic screening. (2) Targeted engagement: Structured dialogue with genuinely affected stakeholders; representative samples acceptable rather than mass surveys. (3) Focused analysis: Assess financial and impact materiality only for strategic priorities, not all potential topics. (4) Cross-functional validation: Risk, finance and sustainability teams jointly review rather than siloed sustainability team assessments.

When do Wave 2 and Wave 3 companies need to comply?

Stop-the-Clock Directive (April 2025) postponed deadlines: Wave 2 (250–1,000 employees): First reporting under ESRS for FY 2027 (disclosure 2028). Wave 3 (Listed SMEs): First reporting under ESRS for FY 2028 (disclosure 2029). This provides two additional years compared to original timeline. Simplified ESRS finalised December 2025 provides governance certainty for their preparation planning.

What assurance do companies require?

Wave 1 companies (2024/2025 reporting) undergo limited assurance (ISAE 3000)—equivalent to review standard. From 2028, large companies transition to reasonable assurance (audit-equivalent). Limited assurance focuses on whether nothing material has come to the auditor's attention suggesting non-compliance. Auditors scrutinise: materiality methodology, stakeholder engagement quality, data accuracy and internal controls, fair presentation of judgements, coherence with financial reporting and risk disclosures.

Can non-reporting companies ignore CSRD?

Not entirely. Even companies outside direct scope face indirect pressure through supply chain due diligence. Large CSRD reporters structure supplier evaluation and performance management around ESG materiality. This cascades ESG data collection requirements to smaller suppliers and partners. Estimated 50,000–60,000 companies indirectly affected through customer procurement processes.

CSRD Materiality Screening

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EFRAG Simplification from 2027: Top-down materiality analysis • 60-61% fewer data points • 7 core ESRS topics • For complete CSRD analysis, contact our experts.

Step 1 of 3 • Estimated time: 5 min.

✨ EFRAG Simplification from 2027

CSRD Double Materiality Quick-Check

Assess ESRS topics in just 5 minutes

🎯 How it works:

Select a topic Click on an ESRS topic (e.g. E1: Climate Change)

Place on matrix Click on the position in the matrix (or drag the topic)

Get results After 3+ topics: First evaluation with export option

💡 Tip: Place topics according to their relevance:
• Top right: Double material (Impact + financial)
• Top left: Impact materiality only
• Bottom right: Financial materiality only
• Bottom left: Not material

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CSRD 2026: Double Materiality Under the Streamlined ESRS Framework

✓ The Current Status: Following EFRAG's December 2025 submission of the simplified ESRS, the sustainability reporting landscape has fundamentally shifted. With 61% fewer mandatory data points and pragmatic proportionality principles now embedded, compliance is leaner and more strategic than ever before. Enforcement remains rigorous—breaches carry penalties up to €10 million—but the path to compliance is clearer.

Double Materiality remains the foundational principle underpinning all CSRD reporting. However, the refined methodology—now emphasising strategic assessment over exhaustive data collection—means companies can achieve robust compliance without excessive administrative burden. The framework examines both directions simultaneously:

📊 Impact Materiality (Inside-Out)

How your company's operations affect the natural environment and society. The streamlined approach focuses on demonstrable, actual impacts rather than theoretical risk scenarios.

💰 Financial Materiality (Outside-In)

How sustainability trends translate into financial risks and opportunities for your enterprise. Qualitative evidence is acceptable in initial phases; quantification follows in subsequent reporting cycles.

The Current ESRS 2.0 Framework: Your Reporting Baseline

Following EFRAG's finalisation in December 2025, the European Sustainability Reporting Standards now provide a leaner, sharper framework for sustainability disclosure. 61% reduction in mandatory data points means companies concentrate resources on genuinely material topics:

🌍 Environmental Standards (E1–E5)

E1 – Climate Change

GHG emissions (Scope 1, 2, 3), climate resilience and transition strategies. Scenario analysis now voluntary; qualitative climate risk assessment acceptable initially, with phase-in for quantitative projections through 2029.

E2 – Pollution

Air, water and soil contamination; hazardous substances and microplastics. Requirements differentiated: non-chemical undertakings report narrower data set; chemical undertakings face more rigorous disclosure with defined phase-ins.

E3 – Water & Marine Resources

Water consumption, stress assessment and wastewater management. Focus now concentrated on material water-stressed regions rather than exhaustive global inventories; simplified boundary definitions apply.

E4 – Biodiversity & Ecosystems

Impacts on biodiversity across operations and value chain. Transition provisions apply until 2027; location-based mapping and biodiversity risk screening are priority actions for near-term preparation.

E5 – Resource Use & Circular Economy

Materials, waste generation and circular business model practices. Proportionality principles allow reasonable estimates without undue cost or effort; pilot-year reporting often reliant on secondary data.

👥 Social Standards (S1–S4)

S1 – Company Workforce

Employment practices, health & safety, diversity and remuneration equity. Reporting thresholds now anchor to ten largest countries of operation; grievance mechanisms consolidated with remedy tracking in single disclosure structure.

S2 – Value Chain Workers

Human rights due diligence across suppliers and external workforces. Policies must address trafficking, forced labour and child labour; engagement and remediation mechanisms consolidated; qualitative targets acceptable alongside quantitative.

S3 – Affected Communities

Community engagement and human rights impacts at operational sites. Material for extractive and land-intensive sectors; simplified definitions and strengthened alignment with international human rights frameworks.

S4 – Consumers & End Users

Product safety, accessibility and responsible marketing practices. Engagement channels and effectiveness assessment of remedy mechanisms centralised; particularly material for consumer-facing industries.

📊 Governance Standard (G1)

G1 – Corporate Governance

Management oversight, ethics, compliance and corruption prevention. Restructured to mirror policies-actions-targets architecture; reduced granularity in governance-specific data points; now emphasises fair presentation over prescriptive checklists.

Current Implementation Reality: What This Means For Your Reporting

The December 2025 finalisation has established the definitive framework companies now operate within. Understanding the practical implications is essential for timely, efficient compliance:

The Materiality Assessment: Pragmatic vs Exhaustive

Top-Down Strategic Approach

Begin with executive workshops identifying 10–15 strategic priorities aligned to business model. This replaces previous bottom-up exhaustive topic screening, saving time and resources while ensuring alignment with strategic objectives.

Targeted Stakeholder Engagement

Structured dialogue with genuinely affected stakeholders rather than mass surveys. Prioritise engagement with high-impact communities, key investors, and material business relationships; representative samples acceptable.

Proportionality Throughout

Use estimates where reasonable and supportable information is unavailable without undue cost. Phase-in periods apply to value chain data and anticipated financial effects through 2029, allowing graduated implementation.

Cross-Functional Validation

Coordinate materiality assessment with enterprise risk management, financial planning and strategy development. Board-level sign-off ensures strategic alignment and defence against audit scrutiny.

Data Collection & Reporting: Streamlined Pathways

Selective mandatory data points: Only material disclosures required; non-material topics may be omitted without complex explanation
Narrative consolidation: Policies, actions, targets now structured consistently across all standards—single governance framework applies
Voluntary disclosures removed: No longer optional—clarity on what is genuinely needed vs administrative burden
Interoperability optimised: Closer alignment with ISSB, GRI frameworks reduces duplication for multi-standard reporters
Fair presentation principle: Focus shifts to quality of reasoning and transparency over volume of metrics

Scope & Timing: Current CSRD Applicability (2026)

The Omnibus Package (July 2025) and Stop-the-Clock Directive (April 2025) have recalibrated the CSRD scope. The current landscape is substantially more focused than originally envisioned:

Wave 1: Now Reporting

Who: Large companies previously under Non-Financial Reporting Directive (>500 employees)

When: Report for FY 2024 (disclosure in 2025); full ESRS 2.0 application for FY 2025

Count: Approximately 500–600 companies EU-wide directly affected

Wave 2: Delayed to 2027

Who: Larger enterprises 250–1,000 employees (Omnibus redefined threshold)

When: FY 2027 (reporting 2028) under ESRS 2.0

Benefit: Two additional years for system build; ESRS final framework established

Wave 3: Delayed to 2028

Who: Listed SMEs (excluding micro enterprises)

When: FY 2028 (reporting 2029); opt-out provisions available

Note: Significantly smaller cohort than original projections

💡 Indirect Scope Impact: Even non-listed companies face indirect pressure through supply chain due diligence. Large CSRD reporters integrate ESG into procurement and performance management, creating cascading compliance demands for smaller partners and suppliers. Estimated indirect impact: 50,000–60,000 companies across EU value chains.

Strategic Advantages: What the Streamlined Framework Delivers

🎯 Focused Resource Allocation

With 61% fewer mandatory data points, teams concentrate effort on genuinely material topics. Reporting becomes strategic rather than compliance tick-box exercise.

⏰ Faster Implementation Timeline

Proportionality principles enable phased implementation. Year-one reporting accepts qualitative assessments; quantitative sophistication builds iteratively through phase-in periods.

💼 Investor Confidence

Standardised, assured reporting under ESRS signals credibility to capital markets managing €110+ trillion in sustainable investments. Fair presentation principles strengthen stakeholder trust.

🌐 Supply Chain Alignment

Clear materiality framework enables coherent supplier engagement. ESG data collection becomes strategic lever for supply chain optimisation and risk mitigation.

Quality Standards & Assurance: The Non-Negotiables

Whilst the revised ESRS 2.0 reduces reporting burden, quality expectations remain high. First-wave reporting experience (2025 for FY 2024) reveals what assurance providers scrutinise:

✓ What Assurance Providers Expect

Documented methodology: Clear criteria for materiality assessment, thresholds and scoring transparently recorded
Coherence with financial reporting: Material topics must align with enterprise risk registers and strategic disclosures
Data governance: Internal controls demonstrating accuracy, completeness and traceability of underlying information
Fair presentation: Narrative reasoning justified; judgements transparent rather than opaque
Value chain scope: Clear boundaries for upstream and downstream activities; omissions explained

⚠️ Common Deficiencies Identified

Siloed assessments: Sustainability teams operating independently from risk/finance; materiality contradicts financial filings
Data gaps: Scope 3 emissions, supply chain human rights metrics, biodiversity data systematically unavailable; reliance on estimates without disclosure
Weak stakeholder engagement: Limited documentation of stakeholder input; insufficient diversity in consultation groups
Inadequate controls: No internal verification; single person responsible; no cross-functional oversight
Lack of transparency: Unexplained judgements; material topics omitted without reasoning; incoherence with public commitments

📋 Assurance Evolution: Wave 1 companies report with limited assurance (ISAE 3000) for FY 2024–2026. From 2028, large companies transition to reasonable assurance (full audit-equivalent engagement). Prepare governance and data quality infrastructure now rather than reactively during audit.

Getting Started: Quick-Check vs Full Compliance

✓ Our Quick-Check Tool Provides

Rapid baseline assessment: Five-minute orientation to your materiality landscape
Visual matrix output: Immediate presentation of results for internal workshops and executive review
ESRS 2.0 alignment: Based on December 2025 finalised standards and proportionality principles
Strategic starting point: Foundation for detailed analysis; identifies priority topics warranting deeper investigation
Exportable findings: Results documentable for audit trail and board communication

⚠️ Full Compliance Requires Additional Steps

Rigorous stakeholder engagement: Structured interviews, focused workshops with material stakeholder groups
Cross-functional validation: Finance, risk, compliance, operations teams formally review and sign-off assessment
Data quality framework: Internal controls, source documentation, aggregation methods all documented for assurance
Limited assurance engagement: Third-party review of methodology and findings before public disclosure
Ongoing refresh cycles: Annual review of materiality; updates when significant business or regulatory changes occur

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CSRD Materiality Screening 2026

📊 Materiality Matrix Tool

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