CSRD Phased Timeline

What is CSRD Phased Timeline?

The original CSRD envisaged three reporting waves. Wave 1 covered large public-interest entities already reporting under the NFRD. These entities began reporting for FY 2024 and published their first ESRS-compliant sustainability statements in 2025. That timeline remains unchanged.

Wave 2 was meant to capture all other large undertakings (exceeding two of three size thresholds: 250 employees, EUR 50M turnover, EUR 25M total assets) from FY 2025. Directive (EU) 2025/794 (the stop-the-clock directive, published 16 April 2025) postponed Wave 2 by two years. Undertakings that remain in scope after the Omnibus I amendments now report for financial years beginning on or after 1 January 2027, with the first publications in 2028.

Wave 3 originally applied to listed SMEs from FY 2026. The stop-the-clock directive already pushed that date to FY 2028. Omnibus I went further and removed listed SMEs from the mandatory scope entirely. These entities may report voluntarily under the VSME (Voluntary Sustainability Standard for Micro, Small and Medium-Sized Enterprises), which the European Commission expects to adopt as a delegated act by mid-2026.

Omnibus I also rewrote the scope test. Instead of the original two-of-three size criteria, the directive now requires an undertaking to exceed both 1,000 employees and EUR 450M net annual turnover before mandatory reporting applies. Wave 1 entities that fall below these revised thresholds received a member-state-level transition exemption for reporting years 2025 and 2026, at the discretion of each member state. The directive was published in the Official Journal on 26 February 2026, enters into force on 18 March 2026, and must be transposed by member states by 19 March 2027.

Worked example: Groupe Lefevre S.A.

Client: Belgian holding company, FY 2026, revenue EUR 185M, 1,400 employees, IFRS reporter. Groupe Lefevre is a listed entity that reported under the NFRD and published its first CSRD-compliant sustainability statement in 2025 covering FY 2024.

Step 1 — Assess continued scope under Omnibus I: Groupe Lefevre has 1,400 employees (above 1,000) but net turnover of EUR 185M (below EUR 450M). Under Omnibus I, the entity must exceed both thresholds. Groupe Lefevre fails the turnover criterion.

Documentation note: record the scope assessment against both Omnibus I thresholds. Attach the FY 2026 management accounts showing net turnover of EUR 185M and the HR headcount report confirming 1,400 FTEs. Cite the Omnibus I directive's revised Article 19a scope provisions.

Step 2 — Determine whether the member-state transition exemption applies: Belgium has transposed the Omnibus I transition provision, permitting Wave 1 entities that no longer meet the revised thresholds to suspend mandatory reporting for FY 2025 and FY 2026. Groupe Lefevre's board reviews the exemption and decides to continue voluntary reporting for FY 2025 (already filed) but to invoke the exemption for FY 2026.

Documentation note: record the board resolution invoking the transition exemption. Reference the Belgian transposition legislation and the Omnibus I provision granting member-state discretion. File the minutes of the audit committee discussion, including the rationale for discontinuing mandatory reporting.

Step 3 — Evaluate implications for the FY 2026 statutory audit: The statutory auditor confirms that the sustainability statement is no longer required for FY 2026. The auditor updates the engagement letter to remove the limited assurance scope over sustainability disclosures. The auditor still considers whether voluntary sustainability disclosures included elsewhere in the annual report are consistent with the financial statements under ISA 720.11.

Documentation note: file the revised engagement letter, the scope-change communication to those charged with governance, and the ISA 720 consistency assessment. Cross-reference the Omnibus I scope analysis from Step 1.

Step 4 — Plan for potential re-entry: Groupe Lefevre's board notes that a pending acquisition (expected to close Q2 2027) would push consolidated turnover above EUR 500M. If the acquisition completes, the entity will exceed both thresholds and re-enter mandatory scope for FY 2028. The CFO instructs the sustainability team to maintain data collection processes during the exemption period so that reporting can resume without a gap.

Documentation note: record the forward-looking scope analysis, the projected post-acquisition financials, and the board decision to maintain sustainability data infrastructure. This working paper supports the auditor's going-concern and subsequent-events evaluation.

Conclusion: Groupe Lefevre's timeline assessment is defensible because each threshold is tested against verified financial data, the transition exemption is traced to the member-state transposition, and the potential re-entry is documented with projected figures.

What reviewers and practitioners get wrong

• Firms assume the stop-the-clock directive eliminated Wave 2 reporting. It postponed it by two years. Undertakings that exceed both the 1,000-employee and EUR 450M-turnover thresholds under Omnibus I must still report for FY 2027, with publication in 2028. Teams that treat the postponement as a cancellation leave clients unprepared when the revised deadline arrives.
• Wave 1 entities that fall below the Omnibus I thresholds sometimes discontinue reporting without checking whether their member state has transposed the transition exemption. The exemption is discretionary at the member-state level; a company in a member state that has not yet transposed the provision remains obligated to report. Auditors should verify the national transposition status before advising clients to stop.

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