On March 26, the European Council announced its support for the stop-the-clock proposal that would push back some compliance dates under the EU’s Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive. The stop-the-clock proposal is part of the European Commission’s broader February 26 Omnibus simplification proposal, which is discussed in detail in this Ropes & Gray post.
More specifically, in furtherance of its approved negotiating mandate from the EU member states, the Council supports the following postponements:
- A two year postponement of CSRD reporting by large undertakings that have not yet started reporting, as well as by listed SMEs. For so-called wave 2 companies, this would mean their initial reporting would be for fiscal 2027, rather than fiscal 2025. This is especially significant for the large number of EU subsidiaries of U.S.-based multinationals that are part of wave 2.
- A one year postponement of each of the CSDDD transposition deadline and the phase-in of the first cohort of companies. These companies would phase in starting July 26, 2028, rather than July 26, 2027.
This most recent Council action follows last week’s adoption of conclusions by the Council expressing high-level support for the Omnibus’ goals and advocating for quick action, as discussed in this Ropes & Gray post.
With the approval of the Council’s negotiating mandate, it can now enter into interinstitutional negotiations, with the goal of reaching a quick provisional agreement with the European Parliament on the stop-the-clock proposal. The Parliament has scheduled an April 1 vote on the Rule 170 Urgent Procedure request to fast-track the proposal. See here for the Parliament’s April 1 meeting agenda. For a discussion of Rule 170, see this Parliament publication.
If the stop-the-clock proposal is adopted (the prevailing view is that it will be), this will provide most U.S.-based multinationals, and many other subject companies, with additional breathing room for CSRD and CSDDD compliance. This would of course generally be viewed as a welcome development by these companies. However, the Omnibus still has a long road to travel. The proposed substantive amendments to the CSRD and CSDDD are much more divisive, as discussed in this Ropes & Gray post from yesterday. And, expect U.S. pressure to address extraterritorial impact of the CSDDD to continue, as discussed in this post on the recently proposed PROTECT USA Act.
