EU Council approves delay to sustainability reporting rules

The Council of the EU has approved a decision, which precedes the European Parliament’s final vote, to delay the application of the CSRD and CSDDD directives governing sustainability reporting obligations. The aim is to reduce the regulatory burden and increase the competitiveness of the European economy.

At the end of last week, the Council of the EU approved the “Stop-the-Clock” mechanism, which will delay the application of some key sustainability regulations. This was reported by, among others, ESG News. If also approved by the European Parliament, the decision will delay the implementation—and therefore the obligations arising from—the Corporate Sustainability Reporting Directive (CSRD) by two years for large companies and listed small and medium-sized enterprises. The Corporate Sustainability Due Diligence Directive (CSDDD) will also be delayed by one year.

In addition to postponing the rules, the decision also limits the amount of information that must be reported and the range of entities covered by the directives. The changes are expected to give businesses more time to prepare for reporting, greater flexibility and a lighter administrative burden. The proposal also linked some reporting obligations, so companies will not have to report the same information multiple times.

According to Adam Szłapka, Poland’s Minister for the European Union, “simplification is one of the priorities of the Polish Presidency. The current agreement is the first step on our determined path towards reducing bureaucracy and increasing the EU’s competitiveness.”

Strengthening EU competitiveness

The initiative is part of the broader “Omnibus I” legislative package, which aims to simplify sustainability regulations and create a more efficient compliance framework. The proposal reflects the EU’s commitment to balancing sustainability goals with economic growth and competitiveness.

The member states voting in the Council largely supported the Polish Presidency’s proposal, recognising the need to simplify and clarify the rules. The delay in implementing the CSRD and CSDDD is expected to strengthen business confidence and ensure more effective adoption of sustainability measures across the EU.

Next steps towards implementation

With the Council’s approval, negotiations with the European Parliament will begin, with the aim of reaching a provisional agreement on the proposal. The next key milestone is a European Parliament vote scheduled for April. The outcome of these negotiations will determine the final form of sustainability compliance requirements in the coming years. Uncertainty remains over how companies that are already subject to CSRD reporting obligations should report.