On February 26, the European Commission adopted a proposal to drastically reduce sustainability reporting requirements in the European Union. The Omnibus Simplification Package included two proposed directives. The first will amend existing regulations to reduce the impact of businesses. The second will delay reporting requirements until 2028 limiting, providing time for the other directive to work through the process. The European Parliament is poised to fast-track the delays, with a first vote scheduled for April 1 before the Committee on Legal Affairs, known as JURI.
The European Union has been the leader in the developing area of sustainability reporting and holding businesses accountable for environmental, climate change, and human rights actions. As part of the European Green Deal, a series of directives were adopted to define green actions, establish reporting requirements, and allow for civil penalties. In 2022, they adopted the Corporate Sustainability Reporting Directive requiring reporting by nearly all companies doing business in the EU. The CSRD reporting began in 2025 for large, publicly traded companies. Reporting for large privately held companies and small and medium-sized enterprises was to be phased in annually.
In 2024, they adopted the Corporate Sustainability Due Diligence Directive, creating aditional reporting requirements, as well as legal liability, for companies in relation to their value chain. The CSDDD was to be effective in 2027.
However, as the reality of the cost and obligations associated with the reporting requirements became more evident, businesses started pushing back. In December, the President of the European Commission announced that new legislation will be introduced to reduce the requirements of the CSRD and CSDDD. In February 2025, the final proposal was released in the form of the Omnibus Simplification Package. The proposal removes mandatory sustainability reporting requirements for most companies, limiting it to large companies with companies with over 1,000 employees and €450-plus million in annual net turnover. It also limits what large companies can request from SMEs. That proposal will now work through the legislative process over the next few months.
Included in the Omnibus Simplification Package was a separate directive that delays both the CSRD and the CSDDD until 2028. The “stop the clock” directive allows businesses to pause reporting and gives the EU time to debate the broader proposal. It was immediately clear that the EU was going to move quickly on the delay. The posted draft agenda for the April 1 JURI meeting confirms it.
The agenda notes a “vote on request for urgent procedure” under Rule 170. The rule states “A request to decide urgently on a proposal submitted to Parliament pursuant to Rule 48(1) as a result of unforeseen developments may be made to Parliament by the President… Such requests shall be made in writing and supported by reasons…” If approved, the item will get priority. Some estimate that the directive could be adopted in as little as a week.
Once adopted, sustainability reporting in the European Union will be paused until 2028, for fiscal year 2027. Focus will then shift to the other directive and what changes will be made to the CSRD and the CSDDD.