Photo source: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L_202500794

The EU Council has officially approved the ‘Stop-the-clock’ directive, a key part of the Commission’s broader Omnibus I simplification package aimed at enhancing EU competitiveness and reducing regulatory burdens on businesses. This directive delays certain obligations under the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), offering companies much-needed legal certainty. Specifically, it postpones CSRD reporting requirements for large companies and listed SMEs by two years:

• Large companies that were originally required to report in 2026 (covering financial year 2025) will now report in 2028 (covering financial year 2027).
• Listed SMEs that were scheduled to report in 2027 (covering financial year 2026) will now report in 2029 (covering financial year 2028).

Postponement of the CS3D Directive Implementation

• The deadline for transposing the Corporate Sustainability Due Diligence Directive (CS3D – Directive 2024/1760/EU) into national legislation has been extended to July 26, 2027.
• The application of the directive for the largest companies—those with more than 5,000 employees and annual net turnover exceeding €1.5 billion—has also been deferred by one year, moving from July 26, 2027 to July 26, 2028.

The directive aligns with EU leaders’ broader push for smarter regulation, as emphasized in the Letta and Draghi competitiveness reports and the Budapest Declaration of November 2024. These calls urged a drastic simplification of the regulatory framework, especially for SMEs. With this agreement, co-legislators gain time to negotiate deeper reforms to the CSRD and CSDDD as proposed in the Omnibus I package. Member states are required to transpose the directive into national law by 31 December 2025, with the legislative act taking effect the day after its publication in the EU’s Official Journal.