The Council of the European Union on November 28, 2022, definitively approved the Corporate Sustainability Reporting Directive (hereinafter the “CSRD” or the “Directive”), already adopted at first reading on 10 November 2022 by the European Parliament1.
The CSRD is the cornerstone of the European Green Deal and the Sustainable Finance Agenda and part of a wider EU policy to commit companies to respect human rights and reduce their impact on the planet.
The Directive introduces more detailed reporting requirements on companies’ impact on the environment, human rights and social standards, extending the scope of application of the Non-Financial Reporting Directive (Directive 2014/95/EU, hereinafter the “NFRD”).
The CSRD, which will enter into force before the end of 2022, is the pivot of the European Union’s action on sustainable finance, aimed at pursuing the climate objectives of the Paris Agreements and the 2030 Agenda.
Through the CSRD, investors and consumers on the market will be allowed to benefit from better access to comparable, relevant and reliable information relating to sustainability with a consequent reduction of investment risks by companies that intend to direct financial flows to companies characterized by a greater degree of sustainability.
CRSD introduces relevant changes to the annual reporting process, and it will force companies to rethink their reporting. The sustainability declaration will be equated to the financial one and must be treated with the same degree of rigor. Companies will be subject to independent audits and certifications to ensure that the data provided is reliable.
SUSTAINABILITY OBLIGATIONS ON HOLD: “STOP THE CLOCK” DIRECTIVE (2025/794/EU) PUBLISHED
On 16 April 2025, Directive (EU) 2025/794 was published in the Official Journal of the European Union. The text represents the first revision procedure introduced under the Omnibus I Package.
The directive, which will enter into force the day after its publication in the Official Journal, had been adopted without amendments on 14 April by both the European Parliament (under the urgent procedure) and the Council of the EU—reflecting a shared political will to provide greater legal certainty for businesses regarding sustainability reporting and due diligence obligations.
Commonly referred to as the “Stop the Clock” Directive, the measure postpones the deadlines for transposing and applying certain obligations set out under two key pieces of EU legislation:
Directive (EU) 2022/2464 (Corporate Sustainability Reporting Directive – CSRD); and Directive (EU) 2024/1760 (Corporate Sustainability Due Diligence Directive – CSDDD),which together form the legislative framework addressing sustainability, non-financial reporting obligations, and the duty of due diligence for companies operating within the EU.
Specifically, the Parliament and Council endorsed the Commission’s proposal to defer the following:
two years, the application of CSRD reporting requirements for large companies which have not yet begun reporting, and for listed SMEs.As a result, large companies with more than 250 employees will now be required to report for the first time on their environmental and social measures in 2028 (instead of 2026), referring to the previous financial year. Listed small and medium-sized enterprises will be required to report a year later.
one year, the transposition deadline and the first phase of CSDDD application for large companies.EU Member States will now have until 26 July 2027 to transpose the directive into national law. The one-year deferral will also apply to: EU-based companies with over 5,000 employees and a net worldwide turnover exceeding €1.5 billion, and to non-EU companies with turnover generated within the EU above the same threshold, which will now be required to comply with the rules from 2028, instead of 2027. The same timeline applies to EU companies with more than 3,000 employees and a net turnover above €900 million, and non-EU companies exceeding that threshold in turnover generated within the EU.
The directive also specifies that Member States are required to comply with its provisions by 31 December 2025, and to promptly inform the European Commission thereof.
It is worth noting that only the deadlines have been changed while the substance of the CSRD and CSDDD remains unchanged.
Background
In October 2024, the European Council called on all institutions to advance work in response to the challenges identified in the reports by Enrico Letta ("Much more than a market") and Mario Draghi ("The future of European competitiveness"). In the Budapest Declaration of 8 November 2024, it was specifically requested to launch a simplification revolution in order to ensure a clear, simple and smart regulatory framework for businesses and to drastically reduce administrative, regulatory and reporting burdens, particularly for SMEs.
On 26 February 2025, following the call from EU leaders, the Commission presented two packages: Omnibus I and Omnibus II, aimed at simplifying existing legislation in the areas of sustainability and investment, respectively.
The Commission proposed these omnibus packages to ease sustainability-related rules and promote the competitiveness of European businesses. The goal is to create a more favourable environment for investment, growth and the creation of quality jobs, without compromising the objectives of the Green Deal.
Specifically, the aim is to reduce administrative burdens by 25% (and by 35% for SMEs), by reviewing rules considered excessive, overlapping or disproportionate. The proposed changes concern key directives such as the CSRD, the CSDDD, the CBAM, and the InvestEU regulation. All of this is in line with the recommendations of the aforementioned reports and the European Competitiveness Compass.
Useful links for further information
Council of the EU press release on 14/04/2025: link European Parliament press release on 03/04/2025: link Q&As on the Omnibus I and II Simplification Packages: link