Following the call from EU leaders, on 26th February 2025, the European Commission presented two packages: Omnibus I and Omnibus II. These two packages aimed at simplifying existing legislation in the areas of sustainability and investment, respectively.
The Commission introduced these omnibus packages to streamline sustainability-related regulations and enhance the competitiveness of European businesses. The aim is to foster a more supportive climate for investment, economic growth, and the creation of quality jobs, while still upholding the core objectives of the Green Deal.
On 16 April 2025, the “Stop the Clock” Directive officially entered into force, bringing significant adjustments to the implementation timelines of key EU sustainability regulations. This directive, adopted as part of the Omnibus I package, provides temporary relief from upcoming reporting and due diligence obligations under the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
Member States must comply with the Stop-the-Clock provisions by 31 December 2025 and to promptly inform the European Commission thereof.
Below, we outline what this means for your business and the practical implications you should be aware of.
- Deferred Timelines under CSRD
The “Stop the Clock” Directive formally postpones the application dates for companies falling under the second and third waves of the CSRD. Specifically:
- Companies originally scheduled to report in 2026 (for FY 2025) will now report in 2028.
- Companies originally scheduled to report in 2027 (for FY 2026) will now report in 2029.
This delay primarily benefits large undertakings not yet subject to reporting and listed SMEs, giving them additional time to prepare their data, systems, and internal controls in line with the European Sustainability Reporting Standards (ESRS). More specifically, large companies with more than 250 employees will now be required to report for the first time on their environmental and social measures in 2028 (instead of 2026), referring to the previous financial year. Listed small and medium-sized enterprises will be required to report a year later.
However, companies already reporting under CSRD from 2025 remain unaffected.
- Extension of CSDDD Transposition and Implementation
The directive also amends key dates related to the CSDDD:
- Member States now have until 26 July 2027 (previously 26 July 2026) to transpose the CSDDD into national law.
- The first application phase, initially set to apply to EU companies with more than 5,000 employees and a net worldwide turnover exceeding €1.5 billion, which originally imposed obligations earlier than others, has been abolished. These companies will now be subject to the obligations starting from 26 July 2028, aligning with the second application phase. The same timeline applies to EU companies with more than 3,000 employees and a net turnover above €900 million, and non-EU companies exceeding that threshold in turnover generated within the EU.
This change introduces a more unified timeline across Member States and removes the phased burden for the largest multinationals.
- Why This Matters
The primary aim of the “Stop the Clock” Directive is to give companies breathing space amidst growing concerns about the complexity and administrative burden of EU sustainability regulations. While the regulatory direction remains unchanged, this reprieve offers valuable time to:
- Review and refine internal ESG reporting capabilities;
- Engage with advisors and auditors on ESRS alignment;
- Monitor the EU’s ongoing legislative revisions, which may introduce substantive changes in due course.
Next Steps for Clients
While this legislative pause offers welcome relief, it should not be interpreted as a signal to slow down preparation. We recommend:
- Continuing internal readiness efforts to avoid last-minute compliance challenges;
- Tracking national implementation approaches, especially for multinationals operating across several Member States;
- Watching closely for proposed amendments under the Omnibus II package, expected to follow later this year.
How we can assist you
We will continue to monitor developments closely and keep you informed. Please do not hesitate to contact us should you wish to discuss how these changes may impact your business or require assistance with sustainability governance strategies. We offer support in developing and implementing sustainability governance frameworks, assessing regulatory risks, enhancing corporate reporting practices, and aligning business strategies with ESG objectives.
