EU Parliament Votes To Delay Sustainability Reporting Until 2028
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On April 3, the European Parliament overwhelming approved delaying corporate sustainability reporting requirements until 2028, for fiscal year 2027. The vote comes as part of a push to simplify and 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.
In February, the European Commission proposed to drastically reduce sustainability reporting requirements in the European Union. The Omnibus Simplification Package included a delay in reporting requirements until 2028, while overall reductions are debated over the next few months. On April 1, the Parliament approved a 'fast track' option that allowed for an expedited vote. On April 3, the Parliament voted 531 - 69 to approve the delays.
The move comes as the EU considers rolling back gains made by climate activists over the past few years. As part of the European Green Deal, a trilogy of directives were adopted to define green actions, establish reporting requirements, and allow for civil penalties. The EU Taxonomy for Sustainable Activities 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, they adopted the CSDDD, creating additional reporting requirements, as well as legal liability, for companies in relation to their value chain.
However, businesses pushed back as the reality of the cost and obligations associated with sustainability reporting requirements became more evident. In December 2024, the President of the European Commission announced that new legislation will be introduced to reduce the requirements of the CSRD and CSDDD. In February 2025, the final proposal was released as the Omnibus Simplification Package. The proposal removes mandatory sustainability reporting requirements for most companies, limiting it to large companies with companies with over 1,000 employees and €450-plus million in annual net turnover. It also limits what large companies can request from small and medium-sized enterprises. That proposal will work through the legislative process over the next few months.
To allow time for the debate to unfold, the separate directive was proposed to delay the CSRD by two years and the CSDDD by one year. The 'stop the clock' directive allows businesses to pause the process to start reporting and gives the EU time to debate the broader proposal. The Parliament was the next to the last stop for approval as it is sent back to the Council, that already gave their initial sign off. Despite multiple proposed amendments in Parliament, including one to delay reporting requirements until 2040, no changes were made from the original language, making the approval by the Council a formality.
EU members states have until December 31, 2025 to transpose the delays to sustainability reporting into national law. Focus now shifts to the broader proposed reductions of the CSRD and the CSDDD, already being considered in the Council and Parliament.
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