The omnibus stop: EU Parliament approves "stop-the-clock" on CSRD and CS3D

"Proposal 1" of the Omnibus Package provided by the EU Commission has now been approved by the EU Parliament without changes, with 531 votes in favour, 69 against and 17 abstentions. It still needs to be formally approved by the Council, but the Council has already endorsed the same text on 26 March 2025.

This so-called "stop-the-clock" proposal postpones reporting under the Corporate Sustainability Reporting Directive ("CSRD")  for Wave 2 and 3 companies by 2 years - respectively to 2028 and 2029 - and the Corporate Sustainability Due Diligence Directive ("CS3D") due diligence requirements by 1 year - from mid-2027 to mid-2028.

The proposal was split out and fast-tracked to give companies and EU regulators some breathing space and certainty while the main substantive amendments to CSRD and CS3D contained in "Proposal 2" of the Omnibus Package are negotiated.  

What next?

Following the EU Parliament approval, the proposal will now be submitted to the Council for formal approval.This is expected to be a formality since the Council has already confirmed its position last week and endorsed the text as provided by the EU Commission.

Once the Council has also approved the proposal and it has been translated into all EU languages, it will be jointly signed by the Presidents of both institutions. After signature, the proposal will be published in the Official Journal and enter into force on the next day. This is expected to occur by the end of June at the latest and as early as 3 - 4 weeks time. 

Member States will have until 31 December 2025 to transpose the text into their national laws. Speed of transposition will likely vary (as seen by the varied approaches to transposing CSRD). Crucially, where CSRD has been transposed into national law (18 EU and EEA Member States), the amendments to delay CSRD reporting won't apply to companies until they are enacted by the national government of their relevant jurisdiction.  

Member States that have not yet transposed CSRD into national law - including Germany, Netherlands and Spain (and therefore CSRD does not apply in such jurisdiction), may consider waiting with the transposition of Proposal 1 until an agreement is reached on Proposal 2. 

The timeline for the substantive amendments to CSRD and CS3D in Proposal 2 is less clear. While the Council has called on co-legislators to finalise this by the end of 2025, the working timeline of the Parliament shows that the Parliament is unlikely to complete its substantive review until October 2025 (indicating that finalisation might slip to the end of 2025 / start of 2026). This would be very quick for EU lawmaking standards – by way of comparison, the timelines of the two instruments covered by the proposal were 21 months for CSRD and 26 months for CS3D.

Last week, the EU Commission has also instructed EFRAG, the standard setting body that has developed the European Sustainability Reporting Standards ("ESRS") complementing CSRD, to provide technical advice on revisions to the ESRS. This includes simplification of datapoints, provision of additional clarifications and instructions, in particular on the materiality assessment, and improving consistency and interoperability. The technical advice should be provided by 31 October 2025. In addition to the changes to the substance of CSRD and CS3D contained in Proposal 2, companies must therefore expect additional changes to the reporting standards in the ESRS.

How does the 'stop-the-clock' impact the timelines for CSRD and CS3D?

Further reading:

Read our detailed analysis of the Omnibus Package here.