The European Council gave its final green light on ‘Stop-the-clock’, one of the European Commission’s proposals to push back the deadlines for certain corporate sustainability reporting and due diligence requirements, as well as the deadline by which individual member states must incorporate the regulations into their laws by two years.
The EU’s co-legislators supported the Commission’s proposal to postpone:
- by two years the entry into application of the Corporate Sustainability Reporting Directive (CSRD) requirements for large companies that have not yet started reporting, as well as listed SMEs, and
- by one year the deadline for member states to incorporate the requirements in their laws and the first phase of the application (covering the largest companies) of the Corporate Sustainability Due Diligence Directive (CSDDD). Member states must transpose this directive into their national legislation by 31 December 2025.
The council said this agreement will provide the co-legislators with time to agree on substantive changes to the CSRD and CSDDD, also proposed by the Commission as part of the ‘Omnibus I’ package on sustainability.
The proposal forms part of the ‘Omnibus I’ package adopted by the Commission at the end of February 2025 to simplify EU legislation in the field of sustainability. The Council and the European Parliament said that, in view of significant implications for the business community, they have treated this proposal with utmost priority aiming to provide EU companies with the necessary legal certainty as regards their reporting and due diligence obligations.
“Today we delivered on our promise regarding simplification of EU laws,” said Adam Szłapka, Minister for the European Union of Poland. “The fast adoption of this directive is an important first step towards cutting red tape, providing legal certainty to our companies and making the EU more competitive.”
Many experts say the changing of the directives and goals will, in fact, create more uncertainty and confusion as well as postponing investments into sustainability that might have otherwise fueled innovation.
The Stop-the-clock measure follows months of deliberation that ostensibly began in October 2024 when the European Council called on EU institutions, member states and stakeholders, as a matter of priority, to respond to reports by Enrico Letta, Much more than a market and Mario Draghi, The future of European competitiveness. The goal was to make Europe more agile and competitive through “a simplification regulation” that would result in a clear, simple and smart regulatory framework for businesses that drastically reduces administrative, regulatory and reporting burdens, in particular for SMEs.
On 26 February 2025, as a follow-up to EU leaders’ call, the Commission put forward two ‘Omnibus’ packages, aiming to simplify existing legislation in the fields of sustainability and investment, respectively. On 20 March 2025, leaders urged the co-legislators to take work forward on these Omnibus simplification packages with a view to finalizing them as soon as possible in 2025. On this occasion, the European Council specifically called on co-legislators to adopt the ‘Stop-the-clock’ mechanism without delay and at the latest by June 2025.
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