EU officially delays CSRD and CSDDD

Today (3 April 2025), the European Parliament adopted the Omnibus Stop-the-Clock proposal (STC) for the CSRD and CSDDD. As discussed in our previous blog, the European Commission published its first Omnibus simplification package on 26 February 2025 which included the STC and proposed substantive amendments to the CSRD, CSDDD, EU Taxonomy and CBAM. Since the adoption of the Omnibus package, the EU co-legislators have advanced at a fast pace to reach agreement on the STC proposal. Member States now have until December 2025 to change national laws to give this effect. 

What has been agreed? 

The entry into application of the CSRD for large companies will be delayed by two years:  

• The obligation on large EU companies to prepare reports on financial years starting in 2025 will be delayed by two years, with the first reports required for financial years starting in 2027. 
• There will be no immediate delay to reporting obligations on Public Interest Entities (PIEs) for FY 2024 reporting.  
• The STC does not impact the current application thresholds (changes to those are being sought in the separate substantive proposal). 

The transposition deadline and the application of the CSDDD to the largest companies will be delayed by one year:  

• Member States are no longer required to transpose CSDDD by July 2026, but by July 2027.  
• The obligations on the largest companies (i.e. EU-headed groups with over 5,000 employees and €1.5bn net turnover worldwide, or non-EU-headed groups with over €1.5bn turnover in the EU) are delayed for one year. This means that substantive obligations will apply from July 2028 instead of July 2027 and that the reporting obligation will apply for FY 2029 instead of FY 2028.  
• The entry into application of obligations for large companies, i.e. EU groups with over 3,000 employees and €900m net turnover worldwide, or non-EU-headed groups with over €900m turnover in the EU, remains unaltered: substantive obligations will start to apply in July 2028 and reporting obligations will start to apply for FY 2029.  
• The entry into application of substantive obligations for EU companies with over 1,000 employees and €450m net turnover worldwide, or non-EU-headed groups with over €450m turnover in the EU also remains unaltered: obligations will start in July 2029. Reporting obligations for these companies, however, are delayed by one year, starting FY 2030 instead of FY 2029. 

The European Parliament overwhelmingly supported the proposal, but this broad support hides major differences between the key political groups which might indicate a bumpy road ahead on the substantive review. However, the mainstream political parties at the centre of the EU political spectrum apparently managed to find an agreement on the STC just a few minutes before the vote, committing “to work constructively throughout all steps of the negotiation process”. 

The European Council has also supported the package despite some calls for further changes (e.g. a two year delay for CSDDD and the inclusion of PIEs in scope for CSRD). This was clearly done in the interest of a swift agreement. The fact that the European Parliament adopted the STC today using the urgent procedure, which is not normally used for this purpose, shows the high importance attached to the issue.   

What does this mean for business?  

The fast approval of the STC should give some reassurance to companies after weeks of legal uncertainty surrounding the Omnibus proposal announcement. Given the three major European institutions agreed to the same changes, the STC is expected to be translated into all the EU Official languages and formally approved by the Council and Parliament quickly. It will be published in the Official Journal of the EU by May/June 2025, hopefully leaving enough time to Member States to transpose the new rules by the end of 2025.  

Some uncertainties remain which will need to be resolved quickly: 

• The treatment of PIEs: No change has been made to the commencement of reporting by large PIEs. PIEs that have reported in 2025 (or are due to do so) must continue with their CSRD reporting in line with Member State laws. 
• Level playing field between Member States: Member States that have already transposed the CSRD can implement the STC by amending the CSRD transposition law. Certain Member States, including Germany and the Netherlands, which have not yet transposed the CSRD, are still obliged to transpose the main requirements of the CSRD, and should now incorporate the STC amendments. If these Member States continue not to transpose the CSRD, the Commission may continue infringement proceedings against those Member States.  
• Will all Member States apply the new timelines? While we are not aware of any Member States opposing a delay in the applicability of CSRD, there remains a risk for companies that a Member State will not implement the STC in time for reporting for financial years starting in 2025. If the STC is not transposed into national law, in-scope companies are required to report on the CSRD as stipulated by the current national law.  
• Updates to ESRS: in parallel, the Commission is requesting that EFRAG provide clarity as soon as possible on its updated reporting standards. Last week, the Commission requested that EFRAG confirm its action plan and timeline for deliverables by 15 April 2025 and tentatively set a deadline for EFRAG to send its draft technical advice regarding revisions to the ESRS by 31 October 2025.  

Next steps 

Now that the negotiations on the STC are completed, the EU co-legislators will seek to agree the substantive parts of the first Omnibus simplification package. We might already see an initial compromise on this in the Council by mid-April 2025. That said, it is expected that negotiations will be complex and time-consuming, especially considering the tense political divisions in the European Parliament.  

While the fast approval of the STC provides much-needed assurance for companies, there are still many open questions in relation to the expected substantive changes foreseen by the Omnibus simplification package. Freshfields will continue to monitor the situation very closely in order to assess the best options in terms of preparation and compliance.