Sustainability Reporting in Transition - Present, Future and what it means for you

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Written by
Cecilia Almér
Reading time
4 min

A lot is happening in sustainability reporting right now - both at EU level and in Swedish legislation. For many companies, this means uncertainty: What rules apply right now? What lies ahead? And how can businesses effectively manage the changes in their processes and systems?


In this article, Cecilia Almér, Sustainability Expert at Stratsys, provides an updated view of the current situation and describes the most important changes that are underway.

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Cecilia Almér, Sustainability Expert at Stratsys

A Year of Uncertainty

With the Omnibus proposal coming from the European Commission at the end of February, rules and requirements regarding sustainability reporting have been questioned. These are significant announcements that affect companies and groups differently depending on which reporting wave they belong to:

Stop the Clock (April 2025)

The EU decided to pause the introduction of CSRD for those companies not yet covered. This means that many companies will have more time before the legal requirements come into force - but at the same time, it creates an important demarcation between wave 1 companies and wave 2-3 companies. This is where it becomes crucial to find out which category your company falls into. If you are unsure, you should contact your accountant - the implications are significant for how you need to report going forward.

Quick Fix for Wave 1 (July 2025)

Even for companies belonging to wave 1, i.e. PIE companies with over 500 employees, there is now a relaxation in the requirements. Among other things, this means an extended phase-in of ESRS, which means that not all data points must be reported directly, even if they are material.

Simplification of the EU taxonomy (July 2025)

July also saw the simplification of the EU taxonomy, through a delegated act that will enter into force on 1 January 2026. It reduces the number of mandatory data items and tables in the taxonomy reporting by around 60%. Companies in wave 1 will be given the opportunity to choose already in the first year whether to report under the old or the new simplified taxonomy structure.

Proposal on simplified ESRS (July 2025)

EFRAG has presented a first draft of simplified ESRS standards. The proposal is out for consultation until 29 September, after which a new version will be processed and submitted to the European Commission, with a deadline of 30 November. It is important to remember that a lot can change along the way.

Swedish Legislation

Sweden is following the EU's development, and Stop the Clock is expected to be written into the Annual Accounts Act and enter into force on December 31, 2025. This means that the pause in CSRD will also apply in Swedish law. During the transition period, the companies that are postponed under Stop the Clock will continue according to NFRD rules, i.e. the rules on sustainability reporting that applied before CSRD.

Decision on Thresholds for CSRD ahead

Looking ahead, however, an even bigger decision awaits: Omnibus II. There is no definitive official date yet, but the plan is for it to take place towards the end of 2025 or the beginning of 2026. At that time, the European Commission, Parliament and Council will agree and decide on the thresholds that will apply, i.e. which companies will be affected by the CSRD legislation in the future. At present, they are not in agreement, but the signals point to an increase to 1,000 employees and a significantly higher turnover threshold than has previously applied, but the negotiations are far from complete. For many Swedish companies, this means an uncertain wait.

What Applies Depending on which "Wave" you belong to?

Wave 1 - Large Public Interest Entities (PIEs) with >500 employees

These companies already report under CSRD. For them, the following applies:

  • Quick Fix provides relief in phasing in.
  • Taxonomy reporting has been simplified with about 60% fewer data points. Companies can choose to continue with the previous model or use the new simplified version in their next reporting.

Wave 2 - Large Unlisted Companies

Wave 2 means that at least two out of three of the following criteria must be met:

  • Average number of employees > 250
  • Total assets > 280 million SEK
  • Net turnover > 550 million SEK

These companies are covered by Stop the Clock and fall back on previous legislation, i.e. the Swedish version of the NFRD (if they were previously covered by it). This means simpler requirements compared to CSRD.

For these companies, interest in the VSME standard - an EFRAG voluntary standard for SMEs - is increasing. But also the simplification of ESRS which will provide a good common basis for companies' sustainability reporting going forward.

VSME - a Common Basis for Smaller Companies

VSME is designed for smaller companies, but as the European Commission recommends it as a reference standard, it may have a wider use than many first thought. The VSME is simpler and more "basic" and can be an important starting point in the dialog with suppliers in the value chain. In this way, even larger companies can benefit from knowing what data points VSME covers, as this is likely to be the level requested in the supply chain.

The Stratsys product for Sustainability Management offers the possibility to work with both ESRS and the VSME standard. This may be particularly relevant for Wave 2 companies, which are not directly covered by CSRD but still want to build a structured sustainability program.

Simplified ESRS - What can we Expect?

It is clear that the ESRS in its first version was extensive and difficult to understand. The simplified version now proposed is a clear simplification: fewer data points, simpler structure and clearer guidance.

But it is also important to remember: double materiality remains. Regardless of the level of simplification, companies need to make an assessment of which sustainability issues are material both from an impact on the outside world and from a financial perspective. This is the basis for reporting - and for the entire sustainability strategy.

Recommendations:

  1. Find out which "wave" you belong to. This will determine which requirements apply right now.
  2. Follow the development of simplified ESRS. They are likely to become a key reference also for companies outside the legal requirement.
  3. Explore the VSME standard. It could become a key for value chain dialog, especially if you request data from suppliers.
  4. Review your system support. Consider how best to combine legal requirements, voluntary standards and strategic objectives.
  5. Keep the dialog with us. Get in touch with us and we will help you find a solution that fits your situation.

Summary

Sustainability reporting is in a state of rapid change. The pause in CSRD through Stop the Clock, the relaxations in the Quick Fix and the proposal for simplified ESRS create a complex picture. But it's also an opportunity: to adapt, find efficient processes and use the right digital support.

At Stratsys, we follow developments closely and build our products so you can stay ahead of the curve - whether you're reporting under CSRD, NFRD or want to test VSME as a complement.

The most important thing right now is not to stop, but to use the pause wisely. You will then be in a stronger position for the next step in EU sustainability legislation.

Want to know more about how Stratsys can support you with sustainability management? Contact us and we will guide you further.