The European Council has officially approved the European Commission’s proposal to delay the implementation of two major sustainability regulations: the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). This move forms part of the broader Omnibus I package, introduced in February 2024, which aims to ease regulatory burdens on businesses, particularly SMEs. Keep reading as we dive into these updates and what the implications could be for corporate sustainability action.
Details of the CSDDD and CSRD delay
Under the approved “stop-the-clock” directive, the application of the CSRD will be delayed by two years for companies that have not yet started reporting. Additionally, CSDDD implementation will be postponed by one year, impacting when member states must transpose the directive into national law.
The Council has stated that the move will “provide EU companies with the necessary legal certainty” as they prepare to comply with evolving sustainability regulations. Adam Szłapka, Minister for the European Union of Poland, described the delay as “a first step on our decisive path to cut red tape and make the EU more competitive.”
This fast-tracked directive was designed to prevent a scenario in which companies would begin preparing and reporting under regulations, only to have the requirements reversed or altered shortly thereafter.
Learn how to navigate CSRD requirements and build a robust reporting strategy
What’s in the Omnibus Package?
The Omnibus I package proposes significant revisions to EU sustainability regulation:
- CSRD scope narrowing: The threshold for compliance would increase to companies with more than 1,000 employees and €50 million+ in revenue. This would remove roughly 80 percent of companies currently in scope.
- ESRS simplification: The European Sustainability Reporting Standards (ESRS) would be revised to substantially reduce the number of required data points.
- CSDDD scope reduction: Companies would be required to conduct full due diligence only for direct business partners unless they have credible information about adverse impacts deeper in the value chain.
- Monitoring frequency cut: Companies would be required to evaluate their due diligence process every five years instead of annually.
- SME burden relief: The proposal also limits the volume of sustainability-related data that larger firms can request from SMEs in their value chains, aligning with the European Financial Reporting Advisory Group’s recently published Voluntary SME Standards (VSME).
The European Parliament is expected to vote on the stop-the-clock directive on April 1st. If passed, it will give Parliament and the Council more time to negotiate the full Omnibus changes.
The push for competitiveness
The CSDDD and CSRD delays are aligned with the European Commission’s ‘Competitiveness Compass’ – a strategy launched to reduce red tape and enhance Europe’s productivity. The Commission has set targets to cut reporting burdens by 25 percent for all businesses and by 35 percent for SMEs.
However, many observers argue this regulatory shift risks weakening Europe’s climate leadership just as momentum for corporate transparency and accountability is building globally.
Conclusion – A step backwards for corporate climate action
While the CSDDD and CSRD delay may offer short-term relief for reporting teams, it sends a broader message of regulatory retreat at a time when sustainability must be accelerated, not slowed down. CSRD and CSDDD are frameworks designed to strengthen business resilience, transparency, and ethical value chain management.
Pausing their implementation risks derailing Europe’s credibility as a frontrunner in sustainability policy and could disrupt corporate momentum already underway. As the climate crisis deepens and sustainability risks grow more complex, postponing regulation offers only short-term certainty and long-term risk.
However, businesses that continue to align with the CSRD and CSDDD frameworks will not only be better prepared for future requirements, but they’ll become the leaders of tomorrow. Acquire the knowledge and skills your team needs to lead in the green economy and remain competitive with our online sustainability reporting course.
