The European Commission has announced a delay in adopting sustainability reporting standards for non-EU companies under the CSRD, as part of its broader agenda to reduce regulatory burdens and boost competitiveness.
According to ESG Today, in a recent letter to EU financial regulators, the Commission outlined a plan to “de-prioritise” 115 legislative acts deemed non-essential to EU policy objectives. Among these is the Delegated Act on European Sustainability Reporting Standards (ESRS) for third-country undertakings — a critical component of the CSRD framework.
The Commission stated that these de-prioritised measures would not be adopted before October 2027.
The ESRS outlines how companies should report on sustainability-related risks, opportunities, and impacts in compliance with the CSRD. Initially, large non-EU companies operating within the EU were expected to begin reporting under these standards by 2028, with the finalisation of the ESRS scheduled for June 2024. However, this timeline was already postponed once to June 2026, and the new delay suggests further extension.
This move aligns with the European Commission’s “simplification agenda,” aimed at enhancing productivity and reducing red tape across industries. The letter highlighted that around 430 follow-up legislative acts were authorised under various EU laws in recent years, with the Commission acknowledging stakeholder concerns about the scale of pending measures.
The delay coincides with ongoing negotiations surrounding the Omnibus I initiative, which seeks to reform key sustainability and corporate responsibility regulations, including the CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD). The proposed Omnibus package suggests narrowing the CSRD’s scope by raising the employee threshold for reporting from 250 to 1,000, and reducing the volume of mandatory disclosures.
Earlier this year, EU lawmakers also passed a “stop-the-clock” directive to pause CSRD implementation for smaller companies while new requirements are discussed. The shift reflects a broader recalibration of EU sustainability regulation to alleviate compliance pressures, especially as international stakeholders — notably the U.S. — express concerns about the extraterritorial impact of the rules.
The delay also follows diplomatic discussions between the EU and U.S., which resulted in a joint framework committing both sides to ensuring the CSRD and CSDDD “do not pose undue restrictions on transatlantic trade.”
In addition to the non-EU ESRS, the Commission has also postponed the adoption of ESRS for listed SMEs and sector-specific sustainability standards. These, too, are expected to be reconsidered under the Omnibus reforms, potentially reducing or eliminating certain reporting obligations altogether.
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