CSRD: European Parliament approves key parts of new reporting legislation

After the new European legislation on environmental reporting passed approval by the European Council, it has now also been approved by the European Parliament. However, uncertainty over the new obligations persists.

Specifically, Parliament approved the “stop-the-clock” proposal, which postpones some obligations under the European Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The information and preliminary analysis were published by ERM. Despite the delay, the broader debate over the so-called Omnibus (a package of new environmental legislation) continues to fuel political tensions and uncertainty, particularly for companies subject to the legislation’s obligations.

Parliament approved the postponement of CSDDD rules until 2028 for the first group of affected companies from the EU (with more than 5,000 employees) and companies from outside the EU with corresponding turnover in the EU. The same timeline applies to the second wave of companies (with more than 3,000 employees or turnover in the EU of EUR 900 million). The second and third waves under the CSRD will also be delayed by two years. Large companies will therefore have to report on sustainability measures from 2028 (for the previous financial year), with listed small and medium-sized enterprises following in 2029.

Last week’s vote, which followed approval by member states in the Council, will make life easier particularly for companies outside the EU — some of these companies also expect the rules to be scrapped entirely for non-EU firms.

The political debate over environmental reporting has intensified further following the European Parliament vote. European employer groups and several finance ministers have backed the Omnibus, citing Mario Draghi’s report on competitiveness, which describes sustainability rules as a regulatory brake. Others, including the European Central Bank and the Platform on Sustainable Finance, have voiced concerns. The ECB, for example, warns against weakening rules on penalties and verification, which it says are key tools in the fight against greenwashing.

MEPs backed the Commission’s proposal, which is part of broader efforts to strengthen EU competitiveness, by 531 votes. There were 69 votes against and 17 abstentions. Member states will have an extra year — until 26 July 2027 — to transpose the rules into national law.