European Commission proposes significant CSRD exemptions and delaying requirements until 2028

On 26 February 2025, the European Commission adopted a new package of proposals, aimed at simplifying EU regulations, boosting competitiveness and unlocking additional investment capacity.

It described this move as ‘a major step forward in creating a more favourable business environment to help EU companies grow, innovate, and create quality jobs’.

The Corporate Sustainability Reporting Directive (CSRD) was introduced by the European Commission in 2021 to enhance corporate transparency on environmental, social and governance (ESG) issues. It builds on the Non-Financial Reporting Directive (NFRD), expanding reporting requirements to more companies and standardising disclosures.

Although the UK is no longer part of the European Union, the CSRD – which officially came into force on 5 January 2023 – impacts UK businesses with EU operations or supply chain links. UK logistics firms may face increased compliance demands from EU partners, requiring robust ESG reporting. While fostering sustainability, it could introduce administrative burdens, urging UK firms to align with EU standards to maintain market access and competitive advantage.

Amongst the new proposals recently announced by the European Commission are plans to remove ‘around 80%’ of companies from the scope of CSRD, the idea behind this being ‘focusing the sustainability reporting obligations on the largest companies which are more likely to have the biggest impacts on people and the environment’.

Another of the changes proposed is a two-year postponement of the reporting requirements for companies currently in the scope of the Corporate Sustainability Reporting Directive (CSRD).

It is hoped that these changes, if implemented, will simplify EU rules and lead to a minimum 25% reduction in administrative burdens, rising to 35% for small to medium-sized enterprises (SMEs).

If adopted and implemented as set out, the European Commission claims that these proposals are ‘conservatively estimated to bring total savings in annual administrative costs of around €6.3 billion (c. £5.2bn) and to mobilise additional public and private investment capacity of €50bn (c.£41.4bn) to support policy priorities’.

“Simplification promised, simplification delivered!” remarked Ursula von der Leyen, president of the European Commission. She continued: “We are presenting our first proposal for far-reaching simplification.

“EU companies will benefit from streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy.

“This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way.”

Stéphane Séjourné, executive vice-president for prosperity and industrial strategy, added: “We are taking concrete steps to cut red tape and make EU rules more accessible and effective for citizens and businesses.

“[This] package is the first step of our far-reaching simplification efforts across all sectors of legislation. We can show that Europe is not only an incredible market to invest, produce, sell and consume but also a simple market.

“This proposal delivers real simplifications – less administrative burden, easier access to funding, and clearer, more predictable rules. We keep our objectives but change the way to better achieve them.”

The next steps will be submitting the proposals to the European Parliament and the European Council for their consideration and adoption, with the changes to the CSRD then set to enter into force once the co-legislators have reached an agreement on the proposals and after publication in the EU Official Journal.

Want to find out more about how to achieve sustainability targets within the supply chain? Make sure to come along the Sustainable Supply Chain Exhibition, co-located with IntraLogisteX and Robotics and Automation at the NEC Birmingham on 25-26 March 2025.

This event will offer a focused environment for logistics, supply chain and sustainability professionals to share ideas, offer solutions and help each other on their sustainability journeys.

Click here to register for free!