On 3 April 2025, the European Parliament approved the European directive to postpone the application date of certain measures related to corporate sustainability reporting (CSRD) and due diligence (CS3D or CSDDD). What do you need to know?
CSRD
The Corporate Sustainability Reporting Directive (CSRD) gradually requires a large number of companies to prepare and publish a sustainability report based on European standards (ESRS).
CS3D
The Corporate Sustainability Due Diligence Directive (CS3D or CSDDD) requires companies and their partners to identify, prevent, end, or mitigate the negative impacts of their activities on human rights and the environment.
Proposal for the ‘Stop the Clock’ Directive
The aim of the proposal is to reduce the administrative burden on companies related to the obligations under CSRD and CS3D.
Content
The text amends the CSRD and CS3D to postpone the application date of some of their provisions.
1. Report regarding the CSRD
The proposal postpones the application date of the CSRD for the second and third wave of affected companies by two years.
Specifically, this means:
Companies that were originally required to publish a sustainability report from 2026 (for the 2025 financial year) will now only need to do so from 2028 (for the 2027 financial year). This mainly concerns large companies that exceed at least two of the following criteria:
Balance sheet total: €25 million
Net turnover: €50 million
Average number of employees: 250
Companies that were originally required to publish a sustainability report from 2027 (for the 2026 financial year) will now only need to do so from 2029 (for the 2028 financial year). This mainly concerns listed SMEs, small non-complex credit institutions, and insurance and reinsurance companies.
2. Report regarding the CS3D
The proposal postpones the national transposition period of the CS3D by one year.
Member States now have until 26 July 2027 (instead of 26 July 2026) to transpose the directive.
Moreover, the first phase of application of the CS3D is abolished.
This phase focused on large companies in the EU, specifically those with more than 5,000 employees and a global turnover of more than €1.5 billion.
Next steps
The proposal for the ‘Stop the Clock’ directive was approved by the European Parliament on 3 April 2025. It must now be formally approved by the Council and published in the Official Journal to enter into force.
Entry into force
This directive will enter into force on the day following its publication in the Official Journal.
