Stop the Clock: Why Has EU Parliament Delayed CSRD & CSDDD?

The European Parliament has voted overwhelmingly to approve delays to key sustainability reporting and due diligence regulations, potentially setting back the EU's ambitious green agenda.

In a decisive 531-69 vote, MEPs voted through the European Commission's 'stop-the-clock' directive, postponing the implementation of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

The decision follows weeks of uncertainty and upheaval in the bloc since the Omnibus package (a series of revisions to European sustainability regulations) was announced in early February 2025.

With these changes, the European Commission is aiming to reduce the reporting burdens on businesses, particularly on SMEs.

“Simplification promised, simplification delivered,” said Ursula von der Leyen, President of the European Commission, when the Omnibus package was first rolled out.

What do these changes mean?

First and foremost, the changes will mean that companies that have not yet started reporting under CSRD will now have two years before they have to start.

The CSDDD transposition deadline will also be pushed back by one year.

"This is a major step forward in providing the much needed clarity and certainty to businesses in Europe, as well as preparing the roadmap ahead for the updated European Sustainability Reporting Standards and assurance requirements," says Christiana Diola, ICAEW's Director for Europe.

Scope reductions and structural changes

So, why exactly is the EU rolling back its requirements for sustainability compliance?

The move comes amid increasing pressure from business groups concerned about the costs and time pressure associated with implementing the EU’s sustainability reporting obligations.

This hasn’t been the case for all businesses, though. When the Omnibus package was first mooted, several high profile companies including Mars, DP World and Unilever co-signed a letter criticising the proposed changes.

Beyond adjustments to timing, the broader Omnibus package proposes significant structural changes to both directives.

The number of companies subject to CSRD reporting requirements could drop by approximately 85% under proposed amendments.

The definition of "large companies" would be dramatically altered to include only firms with more than 1,000 employees (up from 250) and either turnover above US$54m or a balance sheet total exceeding US$27m.

For CSDDD, many of the stricter requirements around value chain enforcement and civil liability have also been removed or weakened.

Experts speculate on the long-term implications

Whilst many companies are in favour of loosening reporting regulations, many sustainability practitioners believe that the long-term effects will obstructive to the EU's pursuit of net zero.

"The Omnibus offers breathing room for many companies," says David Carlin, Founder of D.A. Carlin & Co. 

However, he cautions that "the delay risks setting back progress on sustainability data quality and comparability".

The European Commission has tasked the European Financial Reporting Advisory Group (EFRAG) with simplifying the European Sustainability Reporting Standards (ESRS) by 31 October 2025.

Companies will be permitted to use the revised standards for the 2026 financial year and will be required to implement them from 2027 onwards.

"Ultimately, this is also a story of process failure," David explains. 

"Had the EU initially launched these sustainability frameworks as a single, coherent package with clear sequencing, technical guidance and regulatory alignment progress might be further along today."

The global context

For businesses affected by CSDDD, EU companies with more than 5,000 employees and net turnover exceeding US$1.6bn are now expected to begin reporting from 2028.

Similar timing applies to non-EU companies with EU turnover above the US$1.6bn threshold.

The decision comes amid competing political priorities within the EU, balancing sustainability goals against economic competitiveness concerns.

Despite the delays, sustainability experts warn that reporting must eventually become more stringent.

Companies operating globally may still face reporting requirements under other frameworks such as the International Sustainability Standards Board.

Following the Parliament's approval, the draft law now requires formal endorsement by the European Council.

The vote marks a significant shift in the EU's sustainability regulation timeline but leaves open questions about Europe's long-term commitment to its green agenda.

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