CSRD & CSDDD officially delayed by European Parliament
European Parliament has officially delayed the implementation of two landmark sustainability regulations, the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), following a decisive vote on April 3, 2025. With 531 votes in favor, 69 against, and 17 abstentions, Members of the European Parliament (MEPs) overwhelmingly supported the European Commission’s “stop-the-clock” proposal, granting companies additional time to comply with the stringent requirements.
The decision, part of the broader Omnibus Simplification Package aimed at reducing administrative burdens and enhancing EU competitiveness, pushes back the CSRD reporting timeline for certain companies by two years and delays the CSDDD’s first phase by one year. Large companies with more than 250 employees, originally set to begin CSRD reporting in 2026 or 2027, will now start in 2028 for the fiscal year 2027. Listed small and medium-sized enterprises (SMEs) have until 2029 to comply. Meanwhile, the largest companies under the CSDDD—those with over 5,000 employees and €1.5 billion in turnover—will also see their compliance timeline deferred to 2028, with member states granted until July 2027 to transpose the directives into national law.
The European Commission first proposed the delay in February 2025, citing the need to simplify the bloc’s corporate sustainability frameworks amid concerns from businesses about the regulatory burden. The CSRD requires companies to report on their environmental and social impacts, while the CSDDD mandates due diligence to identify and address human rights and environmental risks in supply chains. Critics of the original timelines argued that the requirements were overly complex, particularly for smaller companies, and could hinder economic competitiveness in a challenging global climate.
The delay was formalized after the European Council endorsed the draft text on March 26, with the Parliament’s approval on April 3 marking the final legislative step. The European Financial Reporting Advisory Group (EFRAG) has been tasked with revising the European Sustainability Reporting Standards (ESRS) under the CSRD, with a seven-month deadline to reduce the number of required data points and streamline reporting processes.
While the move has been welcomed by industry groups, including the insurance sector, which endorsed the postponement as a way to ease compliance pressures, it has sparked debate among environmental advocates and some lawmakers. MEP Tilly Metz criticized the lack of an impact assessment or public consultation prior to the decision, warning that “rolling back sustainability laws under the guise of cutting red tape will not solve the structural problems of the European economy.” Others, however, see the delay as a pragmatic step, giving businesses clarity and breathing room to adapt to the new rules.
The Omnibus Package also includes proposed changes to the scope and content of both directives. For the CSRD, the threshold for compliance may be raised to companies with over 1,000 employees and €50 million in revenue, potentially excluding up to 80% of previously covered companies. For the CSDDD, companies will now only be required to conduct full due diligence beyond direct partners if they have credible evidence of adverse impacts deeper in the supply chain—a significant reduction from the original requirement for systematic in-depth assessments.
Across the Atlantic, the delay has drawn attention from U.S. policymakers. House Financial Services Chair French Hill (R-Ark.) described the CSDDD as a “non-tariff barrier” for U.S. companies, while Senator Bill Hagerty (R-Tenn.) recently introduced a bill to bar U.S. firms deemed “integral to national interests” from complying with foreign sustainability due diligence laws, signaling potential transatlantic tensions over the EU’s green agenda.
As the EU shifts focus to broader reforms of its sustainability frameworks, the Legal Affairs Committee of the European Parliament will now begin work on the substantive changes proposed in the Omnibus Package. While the delay offers companies a reprieve, experts urge businesses to continue preparing, as sustainability reporting and due diligence will eventually become mandatory. For now, the decision marks a significant recalibration of the EU’s ambitious Green Deal, balancing environmental goals with economic realities in an increasingly complex global landscape.
