EU plans to delay implementation of sustainability reporting requirements
- The European Commission is considering delaying some requirements of the European Sustainability Reporting Standards amidst ongoing political debates.
- The discussions are in response to pushback on the Corporate Sustainability Reporting Directive and geopolitical factors affecting the EU economy.
- A compromise is being sought as leaders navigate the complexities of sustainability reporting and its impact on businesses.
On May 23, 2025, discussions continued regarding sustainability reporting in the European Union. The European Commission is evaluating a proposal to postpone certain requirements established under the European Sustainability Reporting Standards (ESRS). This consideration comes amid debates in the European Parliament regarding broader adjustments to the Corporate Sustainability Reporting Directive (CSRD) and the implications of the ongoing geopolitical tensions, particularly following Russia's war against Ukraine. As energy prices rise, there is increasing political pushback on environmental directives, prompting a need for reexamination of these regulations. The CSRD, adopted in 2022, mandates that businesses operating within the EU adhere to enhanced sustainability reporting requirements. Scheduled for wave one implementation in 2025 for the fiscal year 2024, the response to the European Parliament's discussions on the CSRD now includes expanded exemptions for companies with fewer than 750 employees. Political resistance has surged as various stakeholders express concerns about potential burdens created by the directive, particularly in the context of economic stability during challenging times. Consequently, an additional delay for certain ESRS requirements is being contemplated, aligning with feedback received from the Parliament. These discussions reflect the EU's attempt to balance sustainability goals with economic realities, as the landscape for businesses becomes increasingly complex due to external pressures such as geopolitical shifts and rising market tensions. At the same time, a guidance document circulated during the Council of Europe’s COREPER meeting hints at possible compromises regarding sustainability reporting reforms. The Council appears to support some simplification proposals from the Commission for the CSRD, while suggesting a more traditional risk-based approach for the Corporate Sustainability Due Diligence Directive (CSDDD). This ongoing debate illustrates significant divergence in perspectives on sustainability reporting and due diligence, as European Union officials strive to forge a path that reconciles environmental aspirations with the needs of the business community amidst a changing global environment.