EU Regulator Advances Rewrite of Sustainability Reporting Standards

The European Union has officially delayed the implementation of its major sustainability reporting and due diligence regulations, including the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), as part of a broader effort to simplify and reduce the regulatory burden on businesses. The so-called 'stop-the-clock' directive, approved in April 2025, postpones the application of these requirements by up to two years, with Member States required to transpose the changes by the end of 2025. Additionally, the European Financial Reporting Advisory Group (EFRAG) has been tasked with revising the European Sustainability Reporting Standards (ESRS) to make them more business-friendly, with final recommendations due to the European Commission by October 2025. These moves follow significant political shifts in the EU, where the regulatory impact of the Green Deal became a central issue in recent elections, resulting in a rightward shift and decreased support for stringent environmental regulations. The European Commission is also streamlining other sustainability rules, such as the Deforestation Regulation, by clarifying product scope and reducing reporting requirements. These changes reflect a wider trend in the EU to balance environmental goals with economic competitiveness and business concerns.