EU Parliament Votes to Delay Sustainability & Due Diligence Rules

Key Takeaways

• Sustainability Reporting Delayed: The European Parliament has approved a delay in the implementation of the CSRD and CSDDD, giving businesses up to two extra years to comply with sustainability and due diligence regulations.
• Key Compliance Deadlines: Large EU companies (over 5,000 employees and €1.5 billion turnover) and equivalent non-EU companies will need to comply with the CSDDD by 2028, along with those with over 3,000 employees and €900 million turnover.
• Part of a Simplification Effort: The delay is part of the European Commission’s “Omnibus I” simplification package, designed to reduce administrative burdens and enhance EU competitiveness.
• Impact on Supply Chains: These changes affect third-party & supply chain management, as businesses will be required to ensure sustainability and due diligence across their supply chains.

Deep Dive

The European Parliament recently voted in favor of giving businesses a little more breathing room when it comes to complying with the new sustainability and due diligence rules. With an overwhelming vote of 531 for, 69 against, and 17 abstentions, MEPs backed the European Commission's proposal to delay the deadlines for these significant regulations. The intended goal? To simplify the process for businesses and help the EU stay competitive on the global stage. It’s part of the broader “Omnibus I” simplification package, which aims to reduce the red tape businesses face while still driving progress on important issues like human rights and environmental impact.

The Corporate Sustainability Reporting Directive (CSRD), which requires large companies to report on their social and environmental performance, will now be delayed by two years for certain businesses. Here’s the updated timeline:

• Big companies: Those defined as large by CSRD will need to report on their 2027 financial year, with the reports due for publication in 2028. That's two more years to get everything in place.
• SMEs: Smaller businesses, particularly listed small and medium-sized enterprises (SMEs), will get an extra year. They will need to report on the 2028 financial year, and their reports will be published in 2029.

But it doesn’t stop there. As part of this simplification effort, the Commission is also proposing changes to the reporting thresholds, meaning fewer companies will be required to submit reports. This is still being discussed and will be part of the next phase of the Omnibus package.

The Corporate Sustainability Due Diligence Directive (CSDDD) is also getting a delay. This directive requires businesses to address their negative impacts on human rights and the environment. Under the new timeline:

• Big EU companies with over 5,000 employees and €1.5 billion in revenue (as well as non-EU companies that meet the same revenue threshold in the EU) will have until 2028 to start complying with the rules.
• A second group of companies, those with more than 3,000 employees and revenue above €900 million, will also need to adhere to these regulations by 2028.

This delay gives businesses more time to get their house in order, but it’s also a clear signal that the EU is determined to press forward with these critical regulations—just with a bit more space for companies to adapt.

Why the Delay?

This delay isn’t just about giving businesses more time to comply. It’s part of a bigger push to simplify the regulatory environment and make the EU more competitive globally. The “Omnibus I” package, which was introduced by the European Commission in February 2025, is focused on reducing unnecessary administrative burdens, without compromising on key goals like sustainability, human rights, and environmental protection.

And there’s still more to come. The package also includes proposals to change the scope and content of both the CSRD and the CSDDD. These changes will be reviewed by the European Parliament’s Legal Affairs Committee and are expected to be debated in the coming months.

Now that the European Parliament has approved the delay, the draft law must receive formal approval from the Council of the European Union. The Council endorsed the same text in March 2025, so it’s just a matter of time before the new timeline becomes official.

For businesses, this delay offers a chance to catch their breath and reassess how they’re preparing for these sweeping changes. While the details of the final regulations are still being ironed out, one thing is certain and that is that sustainability and due diligence will be central to business operations and third-party management in the EU moving forward. This postponement doesn’t necessarily signal a step back, it could be more of a strategic pause to ensure that companies have the right framework in place to succeed in the long term.

So, while companies might feel relief from the extended deadlines, they can also take this extra time as an opportunity to better position themselves for what’s to come. The EU is moving forward with its sustainability agenda, and those who prepare now will be in the best shape to thrive when the rules are fully in place.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.