In addition to postponement for mandatory sustainability reporting (CSRD), a decision will be taken to push the CSDDD back by one year. This directive requires organisations to take appropriate measures to monitor their value chain in terms of human rights and the environment.
The vote on the ‘stop-the-clock’ proposal is scheduled for 3 April. Although the agreement to utilise the urgent procedure was passed with a comfortable majority of 427 votes, there remain divisions among political groups on the broader Omnibus proposal. Approval on 3 April will allow the co-legislators to begin drafting of the final legal text. This will provide clarity for organisations that are already preparing for these directives and whether they will indeed get more time to do so.
We know from experience that properly setting up processes and systems for data collection on sustainability indicators and assuring the quality of sustainability information can take several reporting years. For organisations that had not yet reached this stage, an opportunity arises to make good use of the extra time to take steps that contribute to their own sustainability strategy and still be ready for reporting.
Both the European Council and the European Parliament have not yet commented on other proposed changes from the Omnibus proposal, such as increasing the scope for mandatory sustainability reporting from 250 to 1,000 employees. A change in the scope of employees would affect an estimated 80% of companies, which previously fell within the scope of CSRD obligations, and they would no longer have to comply. The proposed simplification of CSRD reporting standards is also still under development and these proposed changes will not be assessed until the European Parliament agrees to the deferral. A realistic estimate for finalisation of the final legal text is late 2025, but is dependent on various factors. This timeline highlights the complexity of the legislative process and the importance of careful consideration to achieve a balanced and effective outcome.
We think it is important to emphasise that complying with sustainability guidelines is not the only reason to work on future-proof business and a sustainable course for an organisation. Sustainability reporting and value chain responsibility have voluntarily been on the agenda of organisations for years, and they see the added value of these activities. It provides insight into (value chain) risks and opportunities and enables you to respond to questions about sustainability performance that come from market participants, (direct) stakeholders, or commercial partners. Transparency and being able to clearly communicate about sustainability within your strategy also offers an opportunity to distinguish yourself from competitors. This can still be done by following existing reporting standards such as the European Sustainability Reporting Standards (ESRS) or the Voluntary Small and Medium Enterprise (VSME) standards.
Some organisations are also subject to directives such as EUDR (deforestation regulation) or the EU Forced Labour Regulation (EUFLR), the prevention of forced labour. Organisations can already start preparing and implementing these directives as the timelines for other directives (CSRD and CSDDD) shift.
The CSRD and CSDD have helped develop a common standard and new norm for transparency and corporate responsibility. They provide good tools that can help organisations keep track of their own (supply chain) risks and opportunities, and key stakeholders will continue to expect this from organisations. These tools remain relevant and useful to work with. Think, for instance, of doing a double materiality analysis (DMA), a tool that allows you to focus on which sustainability information you are going to manage and report.
