- Parliament approves two-year delay for Corporate Sustainability Reporting Directive (CSRD) and one-year delay for Corporate Sustainability Due Diligence Directive (CSDDD)
- Vote supports broader EU effort to reduce regulatory burden on businesses.
- Companies urged to use extension to strengthen sustainability data systems.
The European Parliament has voted to adopt the European Commission’s “stop-the-clock” directive, delaying implementation timelines for key sustainability regulations: the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
Passed with a wide majority of 531 votes in favor, 69 against, and 17 abstentions, the decision follows last week’s endorsement by the EU Council and is a major component of the EU’s “Omnibus I” simplification package. The package aims to ease compliance burdens, particularly on SMEs, while still advancing the bloc’s sustainability goals.
Under the new timelines:
- Large companies with more than 250 employees will now begin CSRD reporting in 2028 for FY2027, while listed SMEs will begin one year later.
- The first wave of businesses subject to CSDDD, including EU firms with over 5,000 employees and €1.5 billion in turnover, will now apply the rules from 2028, with an additional year granted to Member States to transpose the rules into national law.
The European Commission has also directed the European Financial Reporting Advisory Group (EFRAG) to revise technical advice for the CSRD’s European Sustainability Reporting Standards (ESRS), with a seven-month deadline. This could enable companies to optionally adopt new standards as early as financial year 2026.
Speaking to ESG News, Maura Hodge, KPMG US Sustainability Leader, emphasized:
“The EU Parliament’s vote to approve the ‘stop-the-clock’ directive grants businesses additional time to align with sustainability reporting requirements. This extension acknowledges the implementation challenges of complex frameworks like the CSRD and CSDDD. At KPMG, we recognize this as a pragmatic recalibration that balances sustainability ambitions with business realities. Companies should use this extended implementation window strategically to strengthen their sustainability data infrastructure and reporting capabilities, ensuring they’re well-positioned for compliance when requirements take full effect in 2028.”
RELATED ARTICLE: EU Council Approves ‘Stop-the-Clock’ Plan to Delay Sustainability Reporting and Due Diligence Rules
The legislative delay is widely seen as a strategic recalibration in response to industry concerns over timeline feasibility and regulatory clarity. It follows months of feedback from corporate stakeholders and regulators seeking to harmonize ESG reporting with business readiness.
Next steps include formal approval by the EU Council, which has already endorsed the same text, and the European Parliament’s Legal Affairs Committee will begin work on broader reforms to CSRD, CSDDD, and other sustainability frameworks included in the Omnibus I legislative package.
Despite the delay, policymakers emphasize that sustainability compliance remains a key long-term priority for the EU and businesses should not view the extension as an opportunity to pause efforts but rather as a window to enhance data readiness, governance, and ESG strategy alignment.
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