EU Parliament Approves ‘Fast Track' Vote On Sustainability Reporting Delays

Forbes

01-04-2025

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In February, the European Commission adopted a proposal to drastically reduce sustainability reporting requirements in the European Union. The Omnibus Simplification Package included a separate directive to delay reporting requirements until 2028, while overall reductions are debated over the next few months. The so called 'stop the clock' directive was approved by the Council and is now facing a final vote in the Parliament. On April 1, the Parliament approved a 'fast track' option, designating the directive as a priority legislation with an anticipated final vote of approval on April 3.
The EU has been the leader in the developing area of sustainability reporting and broader environmental, social, and governance reporting. 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 first was the EU Taxonomy for Sustainable Activities that established a baseline for what companies can consider green activities. In 2022, the EU adopted the Corporate Sustainability Reporting Directive requiring reporting by nearly all companies doing business in the EU. In 2024, they adopted the Corporate Sustainability Due Diligence Directive, creating additional reporting requirements, as well as legal liability, for companies in relation to their value chain.
However, as the reality of the cost and obligations associated with sustainability reporting requirements became more evident, businesses pushed back. In December, 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 in the form of 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 SMEs. That proposal will work through the legislative process over the next few months.
In the interim, a separate directive was proposed to delay both the CSRD and the CSDDD until 2028, for fiscal year 2027. The 'stop the clock' directive allows businesses to pause reporting and gives the EU time to debate the broader proposal. The directive was approved by the Council on March 26, but still requires approval by the Parliament. Due to the more open legislative process of the Parliament, extraordinary measures needed to be taken to allow the directive to be adopted in weeks rather than months.
Under Rule 170, the Parliament can approve a "request to decide urgently on a proposal submitted to Parliament pursuant to Rule 48(1) as a result of unforeseen developments may be made to Parliament by the President… Such requests shall be made in writing and supported by reasons…'
In an April 1 vote, the Parliament approved the fast track procedure by a vote of 427 - 221. Members of Parliament now have until 1:00 PM CET on April 2 to propose amendments. The final vote is scheduled for noon CET on April 3. Given the overwhelming support of the fast track, the delay is likely to pass with no significant amendments.
If approved by the Parliament on April 3, there are some additional procedural steps to be taken with the Council before the 'stop the clock' directive becomes official. Once settled, EU members states will have until December 31, 2025 to transpose the delays to sustainability reporting into national law. Focus will then shift to the broader proposed reductions of the CSRD and the CSDDD, already being considered in the Council and Parliament.