“Stop the Clock” Update

The European Parliament voted on Thursday 3 April, to postpone application of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), under the proposed “stop the clock” directive, which was approved without amendment.

The “stop the clock” directive forms part of the Omnibus package published by the European Commission on 26 February 2025, which aims to simplify EU sustainability reporting and due diligence rules, and amends the CSRD and CSDDD by:

• postponing CSRD reporting requirements by two years for: (1) companies due to report in 2026 in respect of financial years commencing on or after 1 January 2025 (“wave 2” companies); and (2) companies due to report in 2027 in respect of financial years commencing on or after 1 January 2026 (“wave 3” companies); and
• postponing the transposition deadline and the first application of the CSDDD by one year.

The reporting timeframe for “wave 1” companies under the CSRD remains unchanged. Similarly, there is no postponement of the date of application for non-EU companies, which are due to begin reporting in 2029.

It is anticipated that the final text of the “stop the clock” directive will be adopted once it receives formal approval by the Council, which endorsed the proposal on 26 March 2025. The directive will enter force on the day following its publication in the Official Journal of the EU and Member States will be required to transpose it into national law by 31 December 2025.

Irish Implementing Legislation

A press release from the Department of Enterprise Trade and Employment earlier this week confirmed that Minister Burke is “focused on quickly implementing the EU’s Stop the Clock proposal together with the changes proposed by the wider Omnibus, once these are adopted at EU level, thereby delivering certainty for business at all levels in Ireland.”

It was also confirmed that the Minister will soon be amending the existing Irish legislation implementing CSRD to further clarify and reduce the scope of companies covered.

Simplification of ESRS

EFRAG has been tasked with developing technical advice to the European Commission on simplifying the ESRS under the CSRD as part of the Omnibus simplification. The Commission has asked EFRAG to confirm its internal timeline and work plan by 15 April 2025 and deliver its technical advice on the revised ESRS by 31 October 2025.

The revised ESRS are due to be adopted by the Commission, at the latest, six months after the entry into force of the second proposed directive forming part of the Omnibus package, which provides for more detailed amendments to both the CSRD and CSDDD.