• The European Commission has delayed the adoption of sustainability reporting standards for non-EU companies under the Corporate Sustainability Reporting Directive (CSRD) until at least October 2027.
• The delay is part of the EU’s broader effort to reduce administrative burdens through its “simplification agenda,” affecting over 100 planned legislative acts.
• The move coincides with transatlantic negotiations and internal EU proposals to narrow the scope of corporate disclosure requirements under the Omnibus I initiative.
The European Commission has delayed the rollout of sustainability reporting standards for large non-EU companies under the Corporate Sustainability Reporting Directive (CSRD), as part of a broader effort to reduce regulatory complexity and administrative costs across the bloc.
The European Sustainability Reporting Standards (ESRS) for non-EU companies were initially slated for adoption by mid-2024, before being postponed to June 2026. They will now be pushed back even further — with the Commission stating that no action will be taken before October 2027.
The deferral was confirmed in a letter sent by the Commission to the EU’s financial regulators outlining its “de-prioritisation” process. The letter lists 115 legislative acts, deemed “non-essential” to immediate policy objectives, that will be delayed under the bloc’s simplification agenda aimed at boosting competitiveness and reducing red tape.
A Shift in Europe’s Regulatory Tempo
The delay reflects mounting political pressure within the EU to recalibrate the pace of sustainability regulation amid slower growth and a shifting global investment landscape.
The CSRD, which came into force in early 2024, mandates comprehensive sustainability reporting for large EU companies and for non-EU companies generating significant revenue within the bloc. Those foreign entities — typically with over €150 million (US$163 million) in EU turnover and at least one subsidiary or branch in the region — were expected to begin reporting in 2028 using ESRS for “third-country undertakings.”
By deferring the standards’ adoption, the Commission has effectively frozen a key component of its flagship sustainability framework for multinational enterprises.
The move comes as part of the Omnibus I legislative package, currently under negotiation in Brussels, which seeks to consolidate and simplify several interlinked corporate governance laws, including the CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD).
Streamlining the CSRD
Among the proposed Omnibus reforms are significant scope reductions — limiting CSRD reporting obligations to companies with more than 1,000 employees (up from 250) and trimming the volume of required disclosures.
Lawmakers have already introduced a “stop-the-clock” measure that suspends certain CSRD timelines for smaller firms while the new framework is finalized. The combined effect of these adjustments could exclude thousands of companies previously preparing for detailed sustainability disclosures.
Critics of the existing framework have argued that the compliance costs — particularly for mid-sized companies — risk undermining the EU’s industrial competitiveness. Supporters, however, warn that scaling back the regime could erode transparency and weaken investor confidence in sustainability data.
Transatlantic Tensions and Trade Diplomacy
The decision also carries geopolitical undertones. The delay follows pressure from U.S. business groups and political figures concerned that the CSRD’s extraterritorial reach could impose costly and duplicative reporting burdens on American firms.
In recent months, Brussels and Washington concluded a framework agreement that included a commitment to ensure the CSRD and CSDDD “do not pose undue restrictions on transatlantic trade.” The extended timeline may offer breathing room for further alignment or mutual recognition between EU and U.S. disclosure systems.
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Sector and SME Standards Also on Hold
Other reporting standards affected by the EU’s de-prioritisation drive include sector-specific ESRS and rules for listed small and medium-sized enterprises (SMEs). While both had been expected in the near term, they are now unlikely to advance before 2027 — and may ultimately be folded into the broader Omnibus revisions.
For global corporations, the latest deferral introduces a longer period of uncertainty over the eventual shape and timing of EU sustainability disclosure obligations. Some market observers expect firms to maintain alignment with voluntary standards such as the International Sustainability Standards Board (ISSB) or the Task Force on Climate-related Financial Disclosures (TCFD) in the interim to preserve investor confidence and comparability.
Strategic Implications for Investors and Executives
For investors, the delay complicates cross-market ESG data consistency, potentially slowing capital allocation decisions tied to sustainability performance. For multinational executives, it provides short-term regulatory relief but extends uncertainty around long-term compliance planning.
The Commission insists the move is pragmatic, not political — part of an efficiency review aimed at maintaining the EU’s competitiveness while sustaining its environmental ambitions. Yet as Brussels rebalances between regulatory ambition and economic pragmatism, the decision highlights the complex trade-offs confronting global sustainability governance.
When the delayed ESRS package eventually re-emerges, it will likely do so in a leaner form — shaped not only by internal EU negotiations but by the shifting geopolitics of global trade, disclosure standards, and investor expectations.
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