EU Parliament prepares to delay sustainability reporting until 2028

In March 2025, the European Union considered significant changes to sustainability reporting regulations that were initially adopted to enhance transparency for companies regarding their environmental impact. A proposal originating from the European Commission aimed to drastically reduce these reporting requirements and implement a 'stop the clock' directive, effectively postponing the legal reporting obligations until 2028. This initiative emerged in the context of the ongoing economic struggles within the EU, where the burden of environmental policies, particularly the European Green Deal, has been cited as a cause for economic downturns. The Council of the EU had approved the proposed delay before the matter was referred to the European Parliament for further discussion and potential amendments. The legislative process involves multiple stakeholders, including the Committee of Permanent Representatives, also known as Coreper, and the parliament, where debates tend to be more public. Insiders indicated that a vote could take place as soon as April 3, 2025, where final decisions on the 'stop the clock' directive, as well as the parameters for mandatory reporting under the revised European Sustainability Reporting Standards (ESRS), would be made. The 'Omnibus Simplification Package' adopted by the Commission in February 2025 included a directive that aimed to limit the scope of the businesses required to file sustainability reports. The changes specified that only large companies with over 1,000 employees and annual net turnovers exceeding €450 million would be mandated to comply with the reporting standards under the revised Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). This was a response to industry complaints regarding the complexities and financial burdens imposed by previous reporting obligations which had already begun to hinder operations for many businesses. The overarching goal driving these changes is to make the reporting process more efficient while addressing the concerns of the business community regarding the feasibility and impact of extensive sustainability requirements. If approved, the proposed measures are expected to roll back the complexity of sustainability reporting and alleviate the compliance burden for companies operating within the EU. The legislative process remains fluid, with the outcome likely to impact the future direction of sustainability initiatives and corporate accountability across Europe.