EU Pauses Sustainability Reporting: What the Two-Year Delay Means for Businesses

Overview

The European Union has officially delayed the implementation of enhanced sustainability reporting rules for large companies by two years. This move gives businesses more time to prepare for the Corporate Sustainability Reporting Directive (CSRD), but it also raises questions about the EU’s climate and transparency ambitions.

A Strategic Slowdown

In a significant shift, the European Commission announced that large companies will now have until 2028—instead of 2026—to begin reporting under the CSRD if they are not already subject to the Non-Financial Reporting Directive (NFRD). This delay affects around 10,000 companies, many of which are non-EU firms operating within the EU market.

The decision comes amid growing concerns from businesses and industry groups about the complexity and cost of compliance. The Commission cited the need to reduce administrative burden and allow companies more time to adapt to the new standards.

What Is the CSRD?

The Corporate Sustainability Reporting Directive is a cornerstone of the EU’s Green Deal and sustainable finance agenda. It significantly expands the scope and depth of sustainability disclosures required from companies, including:

  • Environmental impact

  • Social and employee-related matters

  • Human rights

  • Anti-corruption and bribery

The CSRD also introduces European Sustainability Reporting Standards (ESRS), which aim to harmonize ESG reporting across the EU.

Who’s Affected by the Delay?

The delay specifically applies to companies that:

  • Are not currently subject to the NFRD

  • Have more than 250 employees, or

  • Meet certain financial thresholds

These companies will now begin reporting in 2028 for the 2027 financial year, instead of starting in 2026. However, companies already under the NFRD will still begin CSRD-aligned reporting in 2025 for the 2024 financial year.

Mixed Reactions from Stakeholders

The delay has sparked a range of reactions:

  • Business groups welcomed the move, calling it a “pragmatic” decision that acknowledges the challenges of implementation.

  • Sustainability advocates, however, expressed concern that the delay could undermine the EU’s leadership in ESG transparency and climate accountability.

The European Commission emphasized that the delay does not signal a retreat from sustainability goals but rather a recalibration to ensure effective and high-quality reporting.

Looking Ahead

While the two-year delay offers breathing room, it also places greater responsibility on companies to use this time wisely. Preparing for CSRD compliance will still require significant investment in data systems, governance, and stakeholder engagement.

The EU’s message is clear: sustainability reporting is not going away—it’s just arriving on a slightly later train.

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