Stop the Clock-EU Pause on CSRD & CSDDD

The European Parliament has voted in favour of the “Stop the Clock” Directive (COM/2025/80), effectively postponing key deadlines under the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). While the timeline has shifted, the core obligations and expectations of the regulations remains intact. Although businesses benefit from this extension, it is essential to continue efforts toward compliance with the regulations and to refocus on preparation.

CSRD Timeline Extended: Large Companies & SMEs Get Breathing Room

Under the newly approved changes, the CSRD reporting requirements for companies not yet subject to reporting—known as "wave 2" and "wave 3" companies—are delayed by two years.

• Large EU companies will now submit their first CSRD reports in 2028, covering financial year 2027—a two-year delay from the original plan.
• Listed small and medium-sized enterprises (SMEs) will begin reporting in 2029, based on financial year 2028—a one-year extension.
• Public Interest Entities must still report on FY2024 in 2025, with no changes to their obligations.

Details of wave 2 and wave 3 companies are listed below:

CSDDD Also Postponed: More Time for Implementation

The transposition and application of the CSDDD has also been delayed:

• The transposition deadline for Member States has moved from July 2026 to July 2027.
• Large multinational companies (with >5,000 employees and €1.5 billion turnover) will now face obligations from July 2028, with reporting starting FY2029.
• Mid-sized companies (with >3,000 employees and €900 million turnover) will begin in July 2028, reporting in FY2029.
• Smaller in-scope companies (with >1,000 employees and €450 million turnover) will begin in July 2029, reporting delayed to FY2030.

Omnibus Package: Streamlining and Simplifying Reporting Requirements

These deferrals are part of a broader Omnibus Simplification Package, announced by the European Commission on 26 February 2025, aimed at reducing the compliance burden while retaining transparency and accountability. Key proposals include:

CSRD Highlights

• Narrowed scope: ~80% of companies removed from CSRD scope.
• New thresholds: Companies with ≥1,000 employees and turnover >€50 million or assets >€25 million now fall under the scope.
• Simplified ESRS standards: Fewer data points, clearer guidance, and consistency with other legislation.
• Voluntary value chain reporting: Mandatory disclosure for indirect suppliers removed, replaced with voluntary standards.
• No immediate sector-specific standards: The expected 2026 rollout has been scrapped.
• Limited assurance requirements: “Reasonable assurance” requirements have been pushed beyond October 2028.

CSDDD Highlights

• Due diligence on indirect suppliers removed
• No requirement to terminate contracts with non-compliant suppliers
• Monitoring frequency reduced: From annual to at least once every five years.
• Civil liability and penalties: Left to national laws, not linked to global turnover.

CBAM: Significant Scope Reduction

Changes to the Carbon Border Adjustment Mechanism (CBAM) include a new annual threshold of 50 metric tons, excluding approximately 90% of current importers and easing reporting for smaller companies.

Next Steps and Caution for Businesses

While these timeline adjustments offer welcome relief, it’s important to note that only the application dates have changed—not the substantive obligations. As Minister Peter Burke emphasized in his March 31st statement, Ireland and other Member States will move quickly to implement the Stop the Clock measures alongside the broader Omnibus reforms once they are formally adopted at the EU level.

Until these changes are formally published in the Official Journal of the EU, national laws transposing the original directives remain in force. Businesses should continue preparing for compliance while keeping an eye on further developments in Brussels.