The European Parliament has officially approved a two-year delay to the Corporate Sustainability Reporting Directive (CSRD) and a one-year delay to the Corporate Sustainability Due Diligence Directive (CSDDD), aiming to ease the regulatory burden on companies while maintaining progress toward ESG and carbon neutral strategy goals. The vote, which passed with overwhelming support (531 in favor, 69 against), is part of the broader “Omnibus I” legislative package initiated by the European Commission. 

Under the revised timeline, large companies with over 250 employees will begin reporting under the CSRD in 2028 for the 2027 financial year. Listed small and medium-sized enterprises (SMEs) will start reporting one year later. Similarly, the CSDDD’s application for the largest companies—those with over 5,000 employees and €1.5 billion in turnover—is postponed to 2028, with a one-year extension for EU Member States to transpose the directive into national law. 

The European Financial Reporting Advisory Group (EFRAG) has been tasked with revising the European Sustainability Reporting Standards (ESRS) within seven months. This opens the door for companies to optionally adopt revised standards as early as FY2026. 

ESG experts see this move as a strategic recalibration. Maura Hodge, KPMG US Sustainability Leader, noted, “This extension acknowledges the implementation challenges of complex frameworks like the CSRD and CSDDD… Companies should use this extended implementation window strategically to strengthen their sustainability data infrastructure.” 

Despite the delay, EU policymakers stress that ESG compliance remains a long-term strategic imperative. The extended timeline should be seen not as a pause, but as an opportunity for companies to enhance their ESG capabilities, align with carbon neutral strategies, and ensure they are fully prepared for regulatory compliance when the mandates take effect. 

Sources: 

https://esgnews.com/eu-parliament-votes-to-delay-sustainability-reporting-and-due-diligence-laws/ 

https://www.europarl.europa.eu/news/en/press-room/20250331IPR27557/sustainability-and-due-diligence-meps-agree-to-delay-application-of-new-rules 

https://www.reuters.com/sustainability/climate-energy/eu-parliament-votes-freeze-sustainability-rules-2025-04-03/ 

https://www.forbes.com/sites/jonmcgowan/2025/04/03/eu-parliament-votes-to-delay-sustainability-reporting-until-2028/