The European Council member states have approved the European Commission's 'stop-the-clock' directive. The directive delays the implementation of key due diligence regulations and sustainability reporting, including CSDDD and CSRD, aiming to give businesses more time for compliance. This will provide private market firms, impact investors, and asset managers additional time to adapt their operations and compliance strategies.
Let's explore the 'stop-the-clock' directive in detail.
About the Stop the Clock directive
The stop-the-clock directive is part of the Omnibus Simplification Package released in February by the EU. The directive postpones the application dates for certain corporate sustainability reporting and due diligence requirements and the transposition deadline of due diligence provisions. The package was open for debate and amendments from legislative bodies; however, the Council of the EU approved the delays on March 26, 2025.
"Simplification is one of the priorities of the Polish presidency. Today's agreement is a first step on our decisive path to cut red tape and make the EU more competitive," said Adam Szłapka, Minister for the European Union of Poland.
Key aspects of the Stop the Clock directive
- The Member states have supported the Commission's proposal to postpone:
- The application of Corporate Sustainability Reporting Directive (CSRD) requirements for large companies that have not yet started reporting by two years.
- The deadline for transposition and the first stage of the Corporate Sustainability Due Diligence Directive (CSDDD) applications (which covers the most prominent companies) has been extended by one year.
- If they can reach a shift agreement, the co-legislators will have time to agree on significant adjustments to the CSRD and CSDDD, which the Commission also suggests as part of the "Omnibus I" package on sustainability.
- The Polish presidency is treating the proposal with utmost priority, as it will provide EU companies with the needed legal certainty regarding their due diligence and reporting obligations.
Next steps
For further updates, the European Parliament has scheduled a vote on the request for urgent procedure on this proposal on April 1, 2025.
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