Accelerating to Stop the Clock (on EU ESG Rules)

As discussed in a previous post, the European Commission proposed the EU Omnibus package on February 26 to reduce the burden, and delay application, of the EU Corporate Sustainability Reporting Directive (CSRD) and the EU Corporate Sustainability Due Diligence Directive (CS3D). The delay portion of Omnibus – dubbed “stop the clock” – would, if adopted, postpone the application of the CSRD by two years (for companies not already reporting under CSRD) and delay the CS3D by one year for the largest companies.

But you may not have woken up this morning thinking about Rule 170 of the Rules and Procedures of the European Parliament – a rule that could have an outsized impact on your business in the coming years. On April 1, the European Parliament plenary meeting will vote on whether to apply Rule 170 to accelerate the “stop the clock” portion of the EU Omnibus package. 

If this vote fails, and the EU does not find another way to accelerate the “stop the clock” proposal, EU companies (including subsidiaries of U.S. groups) may be left in a “legal limbo” of technically being required to comply with the CSRD in 2026, despite ongoing efforts to roll it back.

Let's hope that the other EU institutions will heed the call by the European Council (representing the EU member states) and their position in favor of acceleration released yesterday to take “ambitious” action to simplify the EU ESG regulatory environment.