On April 3, the European Parliament overwhelming approved delaying new corporate sustainability reporting requirements until 2028. The vote comes as part of a push to reduce sustainability reporting requirements found in the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive. Following the anticipated final approval by the Council, member countries will have until December 31 to adopt the “stop the clock” directive into national law.
The move comes as the European Union considers rolling back recent gains made by climate activists. As part of the European Green Deal, three key directives were adopted – the EU Taxonomy for Sustainable Activities, the CSRD, and the CSDDD. Passed first, the Taxonomy established a baseline for what companies can consider green activities. In 2022, the EU adopted the CSRD requiring reporting by nearly all companies doing business in the EU. In 2024, the EU adopted the CSDDD, creating additional reporting requirements, as well as legal liability, for companies in relation to their value chain. The trilogy of directives were set to change the way businesses address climate change and other environmental concerns.
However, in February, in response to business leaders, the European Commission proposed to drastically reduce sustainability reporting requirements in the European Union. The proposed Omnibus Simplification Package included a delay in reporting requirements until 2028, for fiscal year 2027. The intent was to pause the expansion of covered companies while overall reductions are debated in the Parliament and Council. On April 3, the Parliament voted 531 to 69 to approve the delays. Focus now shifts to the broader proposed reductions of the CSRD and the CSDDD, already being considered in the Council and Parliament.
Following the Parliament’s vote, I extended an open invitation to my circle of sustainability and climate change professionals on LinkedIn to provide their take on the “stop the clock” directive. Here are their insights.
The so-called ‘Stop-the-clock’ directive has gone ahead with a significant majority of the members of the European Parliament and has brought together conservative, liberal and center-left politicians. This is logical, since it is certain that the thresholds of companies that will be affected by the CSRD will be modified to a greater or lesser extent soon, so what this directive seeks is to offer greater legal certainty and a stable scenario to companies in the European Union. Many companies will only be affected by the CSRD for a short period of time and under rules that will change, as the European Sustainability Reporting Standards (ESRS) will be modified before the end of 2025. Therefore, the members of the European Parliament have voted on this occasion to save resources for thousands of companies.” Javier Molero Segovia, Director of Projects and Sustainability at United Nations Global Compact (Spain).
“The ‘stop the clock’ isn’t a setback. It’s a strategic inflection point. Looking at the bigger picture, the sustainability landscape is entering its next phase. With over 250 companies (and counting) already setting baseline CSRD reports under evolving assurance frameworks, early adopters can now recalibrate their reporting systems, refine methodologies, and continue to embed sustainability into their core strategy. For those not yet mandated, this is a wake-up call to integrate comprehensive sustainability metrics, capitalizing on stakeholder-driven momentum and future-proofing their business for an era where culture, not just regulation, drives transformation.” Inês Veiga, Sustainability Consultang, UL Solutions (Germany).
“The ‘stop the clock’ directive offers a tactical reprieve for wave 2 and 3 companies under the CSRD and CSDDD. It defers CSRD reporting for large companies by two years, shifting their first obligations to financial years starting in 2027—and postpones key CSDDD obligations for the largest groups by one year, while leaving reporting for Public Interest Entities unchanged. This tactical pause enables regulators, particularly EFRAG, to refine the ESRS and streamline technical standards ahead of the December 2025 transposition deadline, thereby enhancing regulatory clarity. However, this is not a deregulation; it merely offers a temporary recalibration, meaning companies should remain prepared for the eventual reintroduction of stringent enforcement and potential litigation challenges.” – João Maria Botelho, EU Climate Pact Ambassador, Global Shaper at the World Economic Forum (Portugal).
“Stop the clock and take stock. Even though the delay is confusing and disheartening (to the very least for those who have already published their reports), it should be seen as an opportunity to fine tune and evaluate, rather than a step back. Where do you sit as a business, what regulation will have an impact on you, what topics are material- just a few of the questions that should still be answered, irrespective of the different timeline for reporting.” Gergana Tomova, ESG Advisory Director at CFGI UK (England).
“The U.S. Chamber of Commerce welcomes the European Parliament’s overwhelming support to delay the implementation of the CS3D and CSRD. This action demonstrates the Parliament’s ability to react rapidly and decisively to ensure predictability and legal certainty for businesses and policymakers.
“The Chamber appreciates that the Parliament recognizes the need for further refinement of these Directives. We believe this pause provides a much-needed opportunity for stakeholders to engage in constructive discussions to achieve a balanced regulatory framework that supports sustainable business practices—without stifling competitiveness or exerting extraterritorial overreach. The Chamber looks forward to continued collaboration with policymakers to address these important issues.” Marjorie Chorlins, senior vice president for European Affairs at the U.S. Chamber of Commerce (United States).
Via Evan Williams, Vice President, Corporate Governance and Financial Reporting, Center for Capital Markets Competitiveness at U.S. Chamber of Commerce.
“While pausing may offer a moment to reflect, can we afford to delay the progress we’ve made so far? The future of sustainability relies on our ability to act with both urgency and hope. Are we truly ready to seize this moment? We must keep pushing forward, not just to meet targets but to build a resilient future where sustainability is ingrained in everything we do.” Catarina Milagre, Lawyer, specializing in the area of Energy and Natural Resources (Portugal).
Read the full article here
