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ESRS E1 Applicability and Transitional Reliefs

Navigating the 2026 sustainability reporting reset

The Corporate Sustainability Reporting Directive (CSRD) requires in-scope European Union (EU) and non-EU companies (also referred to as undertakings) to disclose structured, decision-useful sustainability information following European Sustainability Reporting Standards (ESRS) as mandated by Directive (EU) 2022/2464. ESRS E1 (Climate Change), adopted through Commission Delegated Regulation (EU) 2023/2772, establishes mandatory climate-related disclosure requirements, including greenhouse gas (GHG) emissions (scopes 1–3), transition plans, climate-related risks and opportunities, and related financial impacts.

This article addresses ESRS E1, distilling only the essential CSRD and ESRS developments—such as transitional reliefs, timing adjustments, and scope changes under the stop the clock, quick fix, and Omnibus I measures—that directly affect the standard’s applicability and reporting requirements, providing an overview for undertakings preparing for FY 2025–2026 reporting.

1. The legal foundation: What applies right now

Under the CSRD, in-scope undertakings must report sustainability information in accordance with the ESRS. The binding technical provisions are established in Commission Delegated Regulation (EU) 2023/2772, which incorporates ESRS Set 1 into EU law. ESRS Set 1 comprises 12 standards, including two crosscutting standards (ESRS 1 and ESRS 2) and 10 topical standards covering Environment (E1–E5), Social (S1–S4), and Governance (G1). Within this set, ESRS E1 (Climate Change) is the dedicated climate-related standard and consists of nine disclosure requirements (E1 1 to E1 9). For most undertakings, the heaviest data‑architecture lift is concentrated in two ESRS E1 datapoints:

E16: Gross scopes 1, 2, 3, and total GHG emissions (consolidating direct, energy indirect, and value chain emissions into a consistent, methodology-anchored metric set).
E19: Anticipated financial effects from material physical and transition risks, and potential climate-related opportunities (linking climate risk/strategy work to quantified or, where permitted, qualitatively substantiated financial outlooks).

2. Appendix C phase‑ins: Structured relief for initial ESRS compliance

Appendix C to ESRS 1 (in Commission Delegated Regulation (EU) 2023/2772) is the formal source of the ESRS phase-ins for your first reporting years. It recognizes the complexity of standing up end-to-end climate data systems and allows a staged application of selected disclosure requirements.
E1-6 – gross scopes 1, 2, 3, and total GHG emissions: Appendix C provides a targeted year one phase‑in. Only undertakings with ≤ 750 employees may omit the scope 3 and total GHG datapoints in their first year; the rest of E1‑6 still applies. For Wave 1 reporters, the quick fix extends certain Appendix C reliefs for FY 2025–2026 as specified in the amending annex(es). Entities > 750 employees are not granted a scope 3/total GHG omission under E1‑6.
E1-9 – anticipated financial effects: Appendix C permits omission in year one for all undertakings. For the first three years, an undertaking may provide only qualitative information if quantitative disclosure is not feasible; Wave 1 reporters can continue to use these reliefs in FY 2025–2026 under the quick fix.
Materiality analysis: The phase‑in options in Appendix C do not override your materiality assessment. ESRS E1 applies only when climate change is material under ESRS 1’s double materiality principle. Once climate is deemed material, the transitional reliefs simply shape how much detail you must disclose in the early years, not whether the disclosure is required at all.

For FY 2025–2026, the Commission’s quick fix, Delegated Regulation (EU) 2025/1416, amends Delegated Regulation (EU) 2023/2772 to extend selected phase-ins in Appendix C of ESRS 1 and to allow certain topical omissions for Wave 1 reporters. Because these reliefs vary by entity and reporting year, undertakings should review the amending annexes to confirm which temporary options apply.

3. The 2025 quick fix: Targeted changes for Wave 1

To support undertakings that reported for FY 2024, the Commission adopted the quick fix, Delegated Regulation (EU) 2025/1416, which amends Delegated Regulation (EU) 2023/2772 (ESRS Set 1) to extend selected Appendix C (ESRS 1) transitional provisions.

For FY 2025–2026, the amending act also permits Wave 1 undertakings to omit disclosures under ESRS E4, S2, S3, and S4, subject to compliance with the ESRS 2.17 summary disclosure requirement where these topics have been assessed as material as explicitly detailed in the associated amending annex(es). Undertakings should consult the amending annex(es) to Regulation 2025/1416 to confirm the exact reliefs, scope, and eligibility conditions, including any size-related criteria that continue to apply.

4. Timing and scope: Stop the clock and Omnibus I

As undertakings plan their CSRD and ESRS reporting trajectory, two recent legislative amendments, commonly referred to as stop the clock and Omnibus I, significantly adjust the timing and scope of CSRD application, reshaping which undertakings report when and under what thresholds.

Stop the clock – Directive (EU) 2025/794: For undertakings that have not yet begun reporting (former Waves 2 and 3), the dates of application of CSRD are deferred by two years; the Wave1 timetable remains unchanged under the directive. This sequencing avoids onboarding entities immediately before the permanent scope is reset.

Omnibus I Directive (EU) 2026/470: Published in the Official Journal on February 26, 2026, and in force from March 18, 2026, Omnibus I recalibrates the CSRD framework, including:

Setting new permanent thresholds so that from fiscal years beginning on or after January 1, 2027, CSRD applies where both 1,000 employees and €450 million net turnover are exceeded (as amended in the directive).
Providing member state transitional options at the national level for undertakings already reporting that will fall below the new thresholds; whether FY 2025–2026 reporting is affected depends on national transposition choices.
Mandating that the European Commission adopt a revised ESRS delegated act by September 18, 2026.

5. Preparatory actions for undertakings ahead of ESRS E1 reporting in FY 2026–2027

Confirm materiality and align with Appendix C: Refresh your double materiality assessment under ESRS 1. Where climate is material, map ESRS E1 datapoints to Appendix C of Commission Delegated Regulation (EU) 2023/2772 and incorporate transitional reliefs introduced by the 2025 quick fix Delegated Regulation (EU) 2025/1416 to determine eligible FY 2025–2026 phase ins and omissions.
Prepare for scope 3 and anticipated financial effects disclosures: Transitional measures are temporary. Under Appendix C, undertakings with ≤ 750 employees may omit scope 3 and total GHG emissions under E1 6 in Year 1 (extended under the quick fix for eligible Wave 1 reporters). For E19, all undertakings may omit year one disclosures and provide qualitative-only information for up to three years where quantitative data is impracticable. Strengthen governance and methodologies now to meet full disclosure requirements.
Monitor member state transposition of Omnibus I: Directive (EU) 2026/470 narrows CSRD scope from FYs starting on or after January 1, 2027, to undertakings exceeding 1,000 employees and €450 million net turnover. Member states may deploy transitional exemptions for undertakings already reporting but falling below the revised thresholds, meaning FY 2025–2026 obligations may differ by jurisdiction. Track national transposition to confirm applicability.
Track the revised ESRS delegated act: Omnibus I requires the Commission to adopt a revised ESRS delegated act by September 18, 2026, shaping reporting from FY 2027 onward. Early monitoring will help align systems and internal controls efficiently.

How BSI Consulting can help:

BSI Consulting helps companies prepare for ESRS E1 reporting by providing end-to-end support across environmental, social, and governance (ESG) materiality; GHG emissions accounting; and climate risk analysis. Our consultants also assist with CSRD regulatory readiness, ESG data collection and validation, and assurance-ready climate disclosures, enabling organizations to meet ESRS E1 requirements with robust governance, transparent methodologies, and credible reporting practices.