EU Parliament Delays Major Due Diligence and Sustainability Reporting Laws to Boost Competitiveness

In a significant move on Thursday, during its Plenary session in Strasbourg, the European Parliament voted to delay the implementation of new EU laws on corporate due diligence and sustainability reporting. With 531 votes in favor, 69 against, and 17 abstentions, MEPs supported the European Commission’s so-called “Stop the clock” proposal to give businesses more time to comply with those regulations, as part of broader efforts to simplify EU regulations and enhance global competitiveness.

What Does This Delay Mean?

The new due diligence rules, which require companies to address their environmental and social impact, will now be pushed back, giving Member States time until 26 July 2027 to incorporate these rules into national legislation, allowing businesses to adjust.

This one-year delay also applies to the first group of businesses impacted: EU companies with over 5,000 employees and a net turnover exceeding €1.5 billion, as well as non-EU companies generating turnover above this threshold in the EU. These companies will only be required to comply with the rules starting in 2028. The same deadline will apply to the second group of companies: EU firms with over 3,000 employees and a net turnover exceeding €900 million, along with non-EU companies meeting this threshold in the EU.

Moreover, the enforcement of the sustainability reporting directive will also be postponed by two years for the second and third groups of businesses affected by the legislation. Large companies with more than 250 employees will be obligated to report on their social and environmental activities beginning in 2028, for the previous financial year. Listed small and medium-sized enterprises will need to provide this information one year later.

Why the Delay?

The decision comes as part of the European Commission’s “Omnibus I” simplification package, presented at the end of February and aimed at cutting red tape and boosting the EU’s global competitiveness. While the delay offers businesses more breathing room, it also needs to ensure that sustainability and due diligence rules remain a priority. These efforts will have to ultimately hold companies accountable for their environmental and social footprint. 

Alongside the directive postponing the implementation of reporting and due diligence rules, which was approved by the Parliament today, the package also includes another directive that alters the content and scope of sustainability reporting and due diligence requirements. Work on this will now begin in the Parliament’s Legal Affairs Committee, according to the ordinary legislative procedure.

Today’s vote regarding the postponement ensures that the companies that were supposed to start reporting in 2026 won’t base their work on criteria that could later be revised, thereby keeping consistency in the reporting process.

What’s Next?

The draft law now moves to the Council for final approval, which, however, has already endorsed the same text at the end of March. Once ratified and published in the Official Journal, the provision will enter into force. These changes will help businesses prepare for the future while supporting the EU’s push toward more responsible corporate practices. In the meantime, the European Commission is continuing its work to refine and strengthen the scope of these new laws. In the face of evolving global challenges, this delay offers businesses a chance to adapt, but the message is clear: sustainability and due diligence are here to stay.