Following the European Commission presenting its Omnibus package of measures in February, the EU Parliament has approved the ‘stop-the-clock’ mechanism on sustainability reporting, delaying implementation for some businesses by two years. MEPs voted overwhelmingly to back the postponement, with 531 votes for and only 69 against (17 abstained). 

The full Omnibus package proposes a range of simplifications across several directives and was issued against a political background where efforts are being focused on boosting competitiveness and reducing burdens.

Following the vote, implementation of the Corporate Sustainability Reporting Directive (CSRD) requirements for both large companies yet to start reporting and listed SMEs is delayed. In practice, this means that companies that meet the definition of a large undertaking will report for the first time in 2028, on their 2027 financial year, and listed SMEs one year later. 

One of the most significant measures proposed in the wider package would see the definition of large companies being amended to companies that have more than 1,000 employees (from 250 employees) and either a turnover above €50m or a balance sheet total above €25m.

The Corporate Sustainability Due Diligence Directive (CSDDD) has also been postponed by one year, giving EU member states until 26 July 2027 to transpose the rules into national law. This, in turn, means that EU companies with more than 5,000 employees and a net turnover of more than €1.5bn – and non-EU companies with an EU turnover above the €1.5bn threshold – are expected to start reporting from 2028. 

Steps to fast-track the proposals under its ‘urgent procedure’ were agreed by the European Parliament earlier this week. To enter into force, the draft law now requires formal approval by the European Council.

“This is a major step forward in providing the much needed clarity and certainty to businesses in Europe, as well as preparing the roadmap ahead for the updated European Sustainability Reporting Standards and assurance requirements,” says Christiana Diola, ICAEW’s Director, Europe. “We look forward to the completion of the legislative process and assessing the final impact on corporate reporting and sustainability assurance in the EU.”