EU Parliament adopts Stop-the-clock Omnibus Proposal and process to simplify ESRS starts
03 April 2025
EU Parliament and EU Council adopt the Stop-the-clock proposal
On 3 April 2025, the European Parliament adopted the EU Commission's proposal in the first Omnibus Package to delay the application dates of certain corporate sustainability reporting and due diligence requirements, as well as the transposition deadline of the due diligence provisions, the so-called "Stop-the-clock" proposal. This follows a vote 2 days earlier by the EU Parliament in favour of the urgent procedure, which allowed the Stop-the-clock Directive to bypass the discussions at the Committee level and to be directly put to a vote by the EU Parliament plenary.
The EU Council agreed its position on the Stop-the-clock proposal on 26 March 2025 and endorsed the text of the Stop-the-clock Directive as EU Member States largely supported the EU Commission's proposal.
Once in force, the Stop the clock Directive will:
(i) amend the Corporate Sustainability Reporting Directive (CSRD) ((EU) 2022/2464) by introducing a 2-year postponement of reporting requirements for in-scope companies that are currently required to report in 2026 and 2027 (second and third wave companies); and
(ii) postpone the deadline for member states to transpose the Corporate Sustainability Due Diligence Directive (CS3D) ((EU) 2024/1760) by a year to 26 July 2027 and postpone by one year (to 26 July 2028) the application of sustainability due diligence requirements for the largest companies in the first wave of CS3D (i.e. EU companies with more than 5,000 employees and net worldwide turnover exceeding EUR 1.5 billion and non-EU companies with an EU turnover above this threshold. Companies in the second wave of CS3D (i.e. EU companies with over 3,000 employees and a net turnover exceeding EUR 900 million, and non-EU companies with EU turnover over that threshold) will have the same implementation deadline (i.e. 26 July 2028), but this is unchanged from the existing deadline in the CS3D.
For more information on the Omnibus Package, see EU Commission publishes first Omnibus Package to simplify sustainability regulations.
What happens next?
The Stop-the-clock Directive follows the EU's ordinary legislative procedure. As the text proposed by the EU Commission has been adopted by both the EU Parliament and the EU Council, only formal approval by the EU Council is needed. Following that, the Stop-the-clock Directive will be published in the Official Journal and will enter into force the following day. Member States then have until 31 December 2025 to transpose it into their national laws.
At the EU Council meeting on 20 March, EU Heads of State and Government called on the co-legislators to proceed with the Omnibus proposal as a priority with a view to adopting the Stop-the-clock Directive by June at the latest and the other measures in the Omnibus package as soon as possible in 2025. In addition, they called on the EU Commission to continue with further simplification initiatives.
The focus will now shift to the other Directive (known as the "Content Directive") proposed in the first Omnibus Package, which covers more substantive changes to the CSRD and CS3D, and for which there is no timetable yet for discussions at the Committee stage.
EFRAG asked to start revisions to the ESRS
One of the substantive changes to the CSRD proposed in the Omnibus Package is the adoption without delay of a delegated act to revise the EU Sustainability Reporting Standards (ESRS), which were adopted by the EU Commission in December 2023 and provide the detailed datapoints that in-scope companies must report under CSRD (see First European Sustainability Reporting Standards (ESRS) apply from 1 January 2024).
These revisions will substantially reduce the number of mandatory datapoints that in-scope companies need to report by removing those deemed least important, prioritising quantitative datapoints over narrative text and distinguishing between mandatory and voluntary datapoints. The revisions will also provide clearer instructions to in-scope companies on how to apply the materiality principle to ensure that do not over-report.
In a letter to EFRAG, the EU Commission have set out a tight timetable for the revisions to the ESRS. They have asked for the technical advice that will inform the delegated act by 31 October 2025. This will allow the EU Commission to adopt the delegated act no later than 6 months after the Content Directive enters into force. The EU Commission acknowledges that the exact timeline for adoption of the Content Directive is unclear but states a 31 October 2025 deadline for the technical advice from EFRAG would allow for revised ESRS to be adopted in time for them to be used in reporting for financial year 2027 and possibly for financial year 2026 if companies wish to use them then.
As regards the CSRD, the success of the simplification exercise heralded by the Omnibus Package depends significantly on how the ESRS are streamlined. Companies that are likely to remain in-scope of CSRD should, therefore, pay careful attention to EFRAG's review process.
