The Quick Fix CSRD Delegated Regulation 2025/1416: Wave 1 relief and extension of the ESRS phase-in to 2026

What the Quick Fix CSRD is

The European regulatory framework on corporate sustainability disclosure is immersed in a process of severe structural calibration. The adoption of Commission Delegated Regulation (EU) 2025/1416 of 11 Jul 2025 (CELEX 32025R1416), published in the Official Journal of the European Union on 10 Nov 2025 and entering into force on 13 Nov 2025, responds to an imperative dogmatic need: to avoid imposing disproportionate burdens on the first-wave companies ("Wave 1") while the structural reform of the Omnibus Directive was being processed. Wave 1 companies, defined as public-interest entities with more than 500 employees, started their reporting obligation in 2025 over the 2024 financial year, becoming temporarily trapped in a regulatory vacuum.

The technical problem arises from the legislative sequence. The simplification package ("Omnibus Simplification Package"), proposed by the Commission in February 2025, included a deadline-freezing proposal ("stop-the-clock"), adopted as Directive (EU) 2025/794. However, that rule did not postpone the application dates for companies required to report for the first time over the 2024 financial year, in order not to prejudge the outcome of the legislative procedure on the future thresholds of the Omnibus Directive. This generated an unacceptable legal asymmetry: Wave 1 companies faced the imminent requirement to comply with additional requirements of the European Sustainability Reporting Standards (ESRS) in the 2025 and 2026 financial years, even though the general framework was being radically cut back.

To remedy this dissonance, the European Commission exercised its delegated power by adopting Delegated Regulation 2025/1416, conceived strictly as a temporary patch ("Quick Fix"). Recital 4 of the Regulation makes explicit the legal irrationality of requiring large companies to comply with additional reporting obligations when a formal proposal existed to subsequently exempt them. In this way, the rule acts as a precautionary measure that freezes the escalation of ESRS requirements, consolidating a transitional containment framework. This legal instrument ensures that Wave 1 entities do not incur compliance costs on complex thematic standards, pending the full materialisation of the definitive post-Omnibus framework and the reconfiguration of the map of obligations for the 2027 financial year.

Provisions of Del Reg 2025/1416

The technical analysis of Delegated Regulation 2025/1416 reveals a substantial alteration of Appendix C of standard ESRS 1, contained in Annex I of the original Delegated Regulation (EU) 2023/2772. The main intervention lies in the removal of the restriction linked to the average headcount, democratising the transitional exemptions ("phase-in") for all Wave 1 companies, regardless of whether they exceed the barrier of 750 employees.

First, the Regulation introduces a critical alteration to standard ESRS E1-6 relating to greenhouse gas (GHG) emissions. The new text allows Wave 1 companies to omit the datapoints on Scope 3 emissions and total GHG emissions during the first three years of preparation of their sustainability statement (financial years 2024, 2025 and 2026). This exemption suspends the requirement to model the climate value chain in its entirety, recognising the serious methodological deficiencies and the lack of maturity of the indirect data available in the market.

Second, the grace period for the most complex thematic standards is drastically extended. Wave 1 companies may omit all the disclosure requirements specified in standards ESRS E4 (Biodiversity and ecosystems), ESRS S2 (Value chain workers), ESRS S3 (Affected communities) and ESRS S4 (Consumers and end-users) during their first three reporting years. The original rule reserved this two-year exemption prerogative exclusively to companies or groups with fewer than 750 employees. The new wording cancels this distinction, protecting larger corporations from the immediate analytical burden of assessing impacts in distant links of the supply chain and in local ecosystems.

Finally, the delegated act introduces a binding technical clarification by amending paragraph 17 of standard ESRS 2. If a company decides to invoke the exemption and omit the information required by standards ESRS E4, S1, S2, S3 or S4, it must imperatively disclose whether those sustainability topics have been assessed as material following its double materiality assessment. If so, the entity is obliged to list the material matters detected and to briefly describe how its business model and strategy integrate the related impacts. This safeguard clause ensures that, although exempted from the granular reporting of metrics and targets, the systemic risks remain visible to the users of the financial information.

Textile brands inside vs outside the Omnibus threshold

The convergence between the Quick Fix exemptions and the restructuring of the scope of application imposed by Directive (EU) 2026/470 (Omnibus) generates a bifurcated scenario for the European textile sector. It is fundamental to distinguish the regulatory treatment applied to the brand inside the Omnibus threshold from the brand outside the Omnibus threshold, eliminating any generic statement based on the simple categorisation of "large enterprise".

The Omnibus Directive redefines the threshold for mandatory subjection to the CSRD by requiring compliance with a double and cumulative criterion. In accordance with the amendment to Article 1 of Directive 2013/34/EU, only those companies that generate a net turnover above 450 million euros and, simultaneously, exceed the average number of 1,000 employees during the financial year are obliged (CELEX 32026L0470). This cumulative requirement ("AND" criterion, not "OR") directly excludes a substantial fraction of the textile corporate fabric from mandatory reporting. For example, a brand with 1,200 workers but a turnover of 300 million euros remains formally exempt from the legal obligation, operating under the status of a brand outside the Omnibus threshold.

Textile brands that do meet this double cumulative criterion (brand inside the Omnibus threshold) are fully categorised in Wave 1. For these entities, Delegated Regulation 2025/1416 acts as a tactical decompression mechanism. They must issue their sustainability reports in 2026 and 2027, but they may rely on the exemptions relating to Scope 3 and omit the biodiversity and value chain worker blocks. They operate under a strict compliance regime but one mitigated in its analytical depth.

For its part, the brand outside the Omnibus threshold escapes the coercion of the full ESRS standards. However, the factual pressure of the supply chain and the financial entities obliges these companies to structure their non-financial information. For this segment, the European legislator contemplates the use of the voluntary standard for SMEs and undertakings not subject to the CSRD (VSME). Article 29ca of the Omnibus Directive empowers the Commission to adopt the definitive voluntary standards by delegated act no later than 19 July 2026, taking Recommendation (EU) 2025/1710 as a basis. This dual regulatory framework requires finance officers to draw up divergent reporting strategies according to the legal location of the company.

Risk of double reporting 2025-2026

The corporate reporting ecosystem faces an anomalous transition period during the 2025 and 2026 financial years. The coexistence of the original ESRS framework (Delegated Regulation 2023/2772) and the omission powers granted by Delegated Regulation 2025/1416 establishes a systemic risk of a double reporting standard. Wave 1 companies have absolute discretion to determine the depth of their disclosures, which inevitably fractures the horizontal comparability of the sustainability statements published in this biennium.

A Wave 1 textile corporation may choose not to rely on the Quick Fix and publish a comprehensive report that includes the exhaustive quantification of its Scope 3 emissions and the detailed modelling of the labour conditions in its supplier workshops (ESRS S2). This stance, oriented towards satisfying the pressures of institutional investors and consolidating its sectoral leadership, implies a massive consumption of analytical and financial resources. By contrast, a competing company of identical size may invoke the extension of the Quick Fix phase-in, legally omitting the biodiversity metrics (ESRS E4) and the impacts on affected communities (ESRS S3), limiting itself to declaring the theoretical materiality of those matters according to the amended paragraph 17 of standard ESRS 2.

Both reports are strictly compliant with the law and will obtain favourable limited assurance opinions. However, the informational value for financial analysts and rating agencies will differ radically. This informational asymmetry penalises entities that bear the cost of early and detailed reporting, undermining the level playing field principle that inspired the original directive.

Additionally, the assurance framework adapts to this transition reality. Article 26a of Directive 2006/43/EC, amended by the Omnibus, postpones the Commission's adoption of the limited assurance standards until 1 July 2027. During the 2025 and 2026 financial years, statutory auditors will carry out their work on hybrid regulatory ground, having to issue their assurance judgments on structurally heterogeneous sustainability statements, exacerbating the technical complexity of reviewing the double materiality assessment.

Horizon of the revised ESRS, September 2026

Delegated Regulation 2025/1416 holds no vocation of permanence; its legal function is circumscribed to acting as a regulatory bridge until the materialisation of the structural revision imposed by the Omnibus Directive (2026/470). Recital 18 of that Directive establishes an unavoidable mandate: the Commission must adopt a delegated act to substantially reform the first set of ESRS standards within six months of its entry into force. Considering that the Directive was published on 26 February 2026 and entered into force twenty days later (18 March 2026), the binding milestone for the adoption of the revised ESRS is inexorably situated in September 2026.

This imminent reform will alter the anatomy of European sustainability reporting. The legislator imposes strict guidelines for the new framework: the removal of datapoints considered less relevant, the absolute prioritisation of quantitative indicators over descriptive text, and a rigorous delimitation between mandatory and voluntary requirements. Particularly critical is the requirement to provide precise instructions on the application of the materiality principle, with the explicit objective of containing the zeal of assurance service providers and reducing the administrative suffocation during the double materiality assessment.

The September 2026 horizon decrees the planned obsolescence of the Quick Fix. From the 2027 financial year, companies that retain the consideration of brand inside the Omnibus threshold (>1,000 employees and >450M€) will be subject to the guidelines of the revised ESRS set, losing the safety net of the temporary exemptions of Regulation 2025/1416. This new framework will require superior analytical maturity, especially in the capture of supply chain data, but under a cleaned-up regulatory architecture. Compliance strategies must be calibrated today, anticipating the quantitative rigidity that the autumn 2026 delegated act will require.

Anticipating the revised ESRS set

The Quick Fix 2025/1416 offers tactical respite, but it does not constitute a structural solution. The obligation to simultaneously monitor the application of the extended phase-in and the imminent adoption of the revised ESRS set consumes the capacity of already saturated compliance teams. The asymmetry between a brand inside the Omnibus threshold and a brand outside the threshold also generates divergent strategic decisions on voluntary VSME.

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