The European Commission (EC) has built smart flexibility into the Corporate Sustainability Reporting Directive (CSRD), giving companies a thoughtful runway to develop their sustainability reporting capabilities.

CSRD phase-in provisions give companies breathing room to develop their sustainability reporting capabilities. These provisions allow companies to gradually implement new reporting requirements instead of trying to do everything at once.

The EC recognizes that building comprehensive sustainability tracking takes time, resources, and strategic planning. Companies can delay reporting on complex areas like their value chain, emissions tracking, and ecosystem impact assessments. 

This phased-in approach allows businesses to build their sustainability muscles incrementally, developing expertise and systems without getting overwhelmed.

In this blog, we will dive into which reporting requirements can be postponed and how to use this extra time strategically. By focusing on key data points today, whilst preparing to expand sustainability data collection capabilities for tomorrow, companies can set themselves up for success in the future. 

CSRD phase-in provisions: A quick recap

The CSRD is the EC’s strategic framework for making sustainability reporting a core business practice in the European Union (EU). For companies, this means creating a clear picture of their impacts on, and the risks and opportunities that come from, society and the environment. Different types of companies will experience different implementation timelines, creating a flexible approach to sustainability transparency.

Large and public-interest companies

Starting in 2024, companies already subject to the Non-Financial Reporting Directive (NFRD), representing around 11,700 large companies, began reporting under the new CSRD framework. These companies include businesses with over 500 employees and key public-interest entities such as listed companies, banks, and insurance providers. 

Other large companies 

The CSRD rollout continues in 2025 by introducing additional thresholds for compliance in terms of company size, turnover and assets. In 2025, large companies hitting at least two of the following benchmarks must begin reporting: 250+ employees, €50m+ net turnover, or €25m+ total assets—will need to comply and prepare to report in 2026.

Listed small and medium-sized companies

SMEs, or companies with between 50-249 employees and €10-50m in net turnover, must begin reporting their sustainability data in 2027. These companies will have additional time and more flexible requirements, ensuring they can participate in sustainability reporting without being overwhelmed by complex new standards. 

CSRD data points 

The CSRD introduces 84 potential disclosure requirements and 1,144 data points across environmental, social, and governance (ESG) criteria. These datapoints are like the ridges and furrows on a finger. Together they come together to create a company’s ESG unique fingerprint.

Not all companies have to report on all 1,144 data points. Some disclosures are mandatory, while others only come into play after conducting materiality assessments. The double materiality assessment is unique to the CSRD and aims to reduce the cost of collecting and reporting on unimportant topics.

As the CSRD is aligned with global frameworks like the Global Reporting Initiative (GRI), many companies may already be collecting data for some of these data points.

CSRD data points eligible for optional delay

As you prepare for the CSRD's implementation, understanding which data points you must report on, and when, is essential. 

Because the EC has built in a phased approach, there are some data points which are mandatory, and others which don’t require reporting just yet. This gives your organization time to build its sustainability data collection and reporting approach. Below is a list of the data points which are eligible for optional delay.

CSRD data point delays for all companies and organizations 

1. Value chain data disclosure delays 

There is a three-year grace period to help companies ease into value chain disclosures. The CSRD requires companies to disclose the impact of their value chain and that includes reporting on both upstream and downstream activities. This means that companies may have to disclose data from their suppliers, distributors, and customers that impact their operations. 

As you can imagine, this is no small feat. For example, these business partners may not themselves be in scope for CSRD reporting yet and that data may not yet be available. Or the supplier may be situated outside of the EU and may not collect data at all. There are any number of reasons why third-party data may not be accessible and the EC acknowledges this complexity. 

That’s why a three-year grace period was introduced and during this time, companies are able to leave out data points relating to their value chain and just be upfront about it by explaining:

• Why they’re leaving it out;
• Why they struggled to get it;
• How they plan on getting the data in the future.

For more information on this, see ESRS 1-10.2 — Transitional provision related to Chapter 5: Value chain.

2. Presenting comparative information disclosure exemption

In a company’s first year of CSRD reporting, they are exempt from disclosing comparative information. That means they don't have to dig up comparative data on quantitative metrics and monetary amounts or narrative disclosures from previous periods, as stated in section 7.1 of ESRS 1. This means they can focus on establishing their baseline without the pressure of historical comparisons. 

For more information on this, see ESRS 1-10.3 — Transitional provision related to section 7.1: Presenting comparative information.

3. Financial impacts from climate change

During the first year of reporting, companies get a pass on disclosing the expected financial impacts of climate change on their business. These impacts could be both risks (like extreme weather events or transitional challenges arising from incoming regulations), as well as opportunities (like market demand for low impact products and services).

In addition to this one-year grace period, the EC has also included a three-year phase in for qualitative reporting. This means that it is possible for companies to only report qualitative disclosures for the first three years, if it is not feasible to prepare quantitative disclosures.

Specifically, this exemption applies to data required by ESRS E1-9. For more information on this exemption, see ESRS 1 Appendix C.

CSRD data point delays for companies with fewer than 750 employees

The EC is also phasing in which data points are required for reporting for smaller companies. They've built in extra phase-in provisions into ESRS 1 that specifically target businesses with fewer than 750 employees. 

These transitional provisions recognize that reporting costs hit smaller companies harder, especially those new to sustainability requirements. By giving companies more time to prepare and spread out initial costs, the EC aims to improve overall reporting quality. 

Depending on the specific topic, these companies can postpone some reporting requirements by up to two years. This approach gives smaller businesses the breathing room they need to build solid sustainability tracking systems without being overwhelmed by compliance challenges.

The additional phase-ins focus on the most challenging reporting areas, like biodiversity and social issues, including: 

1. Social protection for employees 

For the first year of reporting, companies are exempt from social protection data (ESRS S1-11). Social protection refers to access to health care, income support in cases of challenging life events such as the loss of a job, sick leave or medical care, giving birth and raising a child, or retiring and in need of a pension. 

2. Biodiversity and ecosystems

Companies are also allowed to delay reporting on impacts on ecosystems and biodiversity conservation (ESRS E4) efforts for the first two years of implementation.

3. Workers in the value chain

Beyond the social protection for employees mentioned above, all data points that touch on workers in the value chain (ESRS S2), including employee rights, labor standards, and workplace conditions, can be delayed for the first two years.

4. Affected communities

Companies can postpone all disclosure requirements covering ethical business practices, anti-corruption measures, and compliance (ESRS S3) for the first two years.

5. Consumers and end-users 

All disclosure requirements relating to product safety, customer satisfaction, and consumer rights (ESRS S4) are eligible for a two-year delay.

While companies may omit this data from their sustainability reporting for the grace-period mentioned, they must still include the topic in the scope of the materiality assessment. For more information on these one and two year grace periods for companies with fewer than 750 employees, see ESRS 1 Appendix C.

Sector-specific and SME CSRD data point delays

The CSRD has undergone some recent changes regarding sector-specific standards and SME considerations. Below is an overview of the key developments:

1. Sector-specific sustainability reporting standards postponed

Aside from the first set of sector-agnostic ESRS, the EC is preparing to publish specific standards for a diverse array of sectors; oil and gas, mining, food, automotive, road transport, energy, agriculture, and textiles, to name a few.

The European Union has officially delayed the adoption of these sector-specific standards by two years. The deadline for adopting sector-specific ESRS will now come into effect on June 30, 2026. This delay allows companies to focus on implementing the first set of sector-agnostic ESRS. 

Despite the delay, it has been suggested that the EC may publish and adopt sector-specific reporting standards for some non-specified areas before the 2026 deadline if they are ready.

2. SMEs and optional delay to 2028

Small and medium-sized businesses enjoy longer timelines for some disclosures. Currently, SMEs with between 50-249 employees and €10-50m in net turnover, must begin sustainability reporting in 2026. 

However, to simplify compliance for SMEs, two specific standards are being drafted by EFRAG: the Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME) and the mandatory standard for listed SMEs (LSME). The drafts for these simplified ESRS for SMES are expected to be published by early 2025.

Listed SMEs, small banks and captive insurers standard in development

Listed SMEs, small banks and captive insurers (together called “LSME”) are mandated to report in 2026. However, these LSMEs have the option to postpone their reporting obligations for two years (in 2026 and 2027), if they choose to. However, if they do, they must explain why they’ve chosen to do so in their annual report. As a result, they must begin collecting data in the financial year 2028. 

This means SMEs can defer their compliance requirement to 2029. According to the EC, reducing the “administrative burden” allows SMEs to create solid sustainability practices by focusing on the first set of ESRS.

VSME

Non-listed SMEs that are not directly required to comply with the CSRD (referred to as VSMEs) may still report voluntarily. As they may still be indirectly affected by the directive, with large companies subject to CSRD requesting sustainability data from their supply chain partners, the EC is currently developing a voluntary sustainability reporting standard for VSMEs. 

The rationale behind these optional delays

In one publication about EU competitiveness, the EC found that reporting was one of the main burdens for companies in general and for SMEs in particular. These optional delays are rooted in reducing the compliance burden while companies transition into sustainability reporting. 

Another of the EC’s goals with disclosure delays and postponements for reporting on specific data points is to enhance the quality of reporting, ensuring that companies can provide accurate and valuable information rather than rushing to meet deadlines with incomplete data.

Thomas Dodd, the European Commission's team leader of sustainability reporting, stated during a committee hearing that the EC "recognizes the challenge of maintaining the high ambition defined in the Corporate Sustainability Reporting Directive … while not going so fast that we endanger the correct and high-quality implementation of the reporting requirements themselves".

Practical tips for companies that need to start reporting

At Coolset, we believe that even though there might be data points which don’t necessarily require reporting just yet, companies that are prepared to collect this data will benefit in the long run. 

Here are three tips to get started:

1. Use ESRS data point mapping tools

Technology can be an ally in sustainability reporting. Using tools that assist in ESRS data point mapping can streamline your process and allow for easy identification of material data points that require attention over those that can wait.

2. The importance of early preparation

Even if some data points allow for optional delays, early preparation will get you ready for when reporting on these topics becomes mandatory. Starting the groundwork now, especially in terms of data collection, will ensure your business can hit the ground running.

3. Choosing the right CSRD reporting software for your business

Selecting appropriate CSRD reporting software can simplify the complexity of compliance. Tools specifically designed for the CSRD will provide guided workflows and templates, making data collection and reporting not only easier but more reliable. Use tools like Coolset to streamline the entire CSRD compliance journey, from conducting double materiality assessments to generating audit-proof reports.

In conclusion

As you prepare your organization for the implementation of the EU’s sustainability reporting, understanding CSRD phase in’s for specific data points can provide much-needed clarity and minimise the pressures on your business.

By prioritizing foundational disclosures and utilizing tools that support strategic reporting, your company will not only comply with current requirements but will also lay the groundwork for future sustainability success.

Coolset's platform is designed to simplify sustainability reporting, especially for mid-market companies and SMEs, by providing an all-in-one solution for carbon management and CSRD compliance.

Start simplifying your sustainability reporting strategy today by scheduling a strategic consultation with our sustainability team today or try our interactive demo.