EU Council delays CSRD and CSDDD sustainability reporting
In a significant move aimed at easing the regulatory burden, EU member states in the European Council have greenlit the European Commission’s directive to postpone crucial sustainability reporting and due diligence mandates.
According to ESG Today, this directive, known as the ‘stop-the-clock’, is a pivotal part of the Commission’s Omnibus I package, which was introduced in February to mitigate the sustainability reporting load, especially on small and medium-sized enterprises (SMEs).
The Omnibus package proposed sweeping adjustments to various regulations, including the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). It suggests a two-year delay in CSRD enforcement for companies that are yet to start reporting and pushes back the transposition and application of the CSDDD by a year.
The ‘stop-the-clock’ initiative was designed to expedite the adoption of these delays, ensuring that businesses wouldn’t have to start reporting only to have those requirements lifted shortly after. The Polish presidency of the Council emphasized the urgent handling of this proposal to provide “EU companies with the necessary legal certainty regarding their reporting and due diligence obligations,” facilitating the Council and Parliament to finalize the Omnibus’ substantive changes.
Adam Szłapka, Minister for the European Union of Poland, highlighted the importance of these reforms. “Simplification is one of the priorities of the Polish presidency. Today’s agreement is a first step on our decisive path to cut red tape and make the EU more competitive,” he stated.
The Omnibus package notably targets smaller businesses, aligning with the Commission’s ‘Competitiveness Compass’ that seeks to boost Europe’s productivity and competitiveness by proposing to cut reporting burdens by at least 25% for all companies and 35% for SMEs.
Additionally, the proposed modifications to the CSRD would narrow its scope significantly, exempting around 80% of businesses by only covering companies with over 1,000 employees and revenues exceeding €50m. Furthermore, the European Commission plans to revise the European Sustainability Reporting Standards (ESRS) to decrease the required data points substantially.
Changes to the CSDDD include limiting full due diligence to direct business partners unless there’s credible information of adverse impacts further along the value chain, and extending the period for monitoring the effectiveness of due diligence practices from annually to every five years.
The European Parliament is expected to vote on the ‘stop-the-clock’ proposal on April 1, marking a critical step towards regulatory adaptation in response to business needs.
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March 28, 2025 at 11:56AM
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