The European Union’s bid to simplify compliance burdens is working its way through the legislative process, which is expected to take a year to fully complete, EU policy lobbyists and advisers said last week.
The European Commission adopted a proposal last month to simplify reporting requirements and delay timelines for some of its major corporate sustainability laws, including the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive.
The Commission’s proposal represents just the first step of the legislative process in the EU, which will still need to pass through co-legislators in the European Parliament and European Council. As companies sort through the proposed changes — which would delay reporting timelines for both laws until 2028 and remove 80% of companies from the CSRD’s scope — the European Parliament will be next to take up the proposal.
A vote on the proposal to “stop the clock” for compliance and delay timelines is expected in April, and more clarity on the reporting timelines should follow over the summer, experts said Thursday at the Sustain 2025 conference hosted online and in Paris, France, by sustainability platform EcoVadis.
However, the parliament is currently split on the proposal, across both parties and nationalities, according to Julie Slot Andersen, an assistant policy adviser to Danish politician and member of Parliament Kira Marie Peter-Hansen. Slot Andersen said on a livestreamed session Thursday that the European Greens — a left-leaning party that makes up around 7% of the body, including Peter-Hansen — sees the package of bills “as massive deregulation that threatens the original policy goals of the legislation.”
“[The Greens are] super happy to support simplification efforts and make it easier to be a company in the EU, but these efforts shouldn't compromise the protection of the people and the planet,” Slot Andersen said. “And we do think that the omnibus proposal is going in that way.”
The proposal makes changes that would make it easier for companies to comply, the panel said. Cornelius Müller, a sustainability advocate for lobbying firm #SustainablePublicAffairs, said the bills represent “changes in the ambition” of member countries.
“Looking at the text that we have here right now, we can see that they're — while keeping the initial ideas of it [and] keeping the trajectory they're on — really moving away from the ambition that was introduced by the original proposals,” Müller said.
The proposal adopted by the Commission would remove the majority of companies from the CSRD’s scope by only requiring companies with more than 1,000 employees to report. The Commission’s proposal also looks to limit the amount of information that can be requested from companies with under 1,000 employees. Companies formerly in-scope would still be able to voluntarily report under a standard developed by the European Financial Reporting Advisory Group, which is also undergoing revisions and simplification. Müller said that the goal for that simplification is to focus on quantitative measurements “and really putting the qualitative points aside.”
Changes to the CSDDD now take a more “risk-based approach,” Müller said. In addition to delaying applications by a year to 2028 — which would align with the CSRD delay for the second wave of companies required to report — the proposal would only require corporations to do in-depth assessments for direct suppliers, with a full due diligence only required beyond that level when it “has plausible information suggesting that adverse impacts have arisen or may arise” further down the value chain.
Müller said once clarity is gained on the reporting timelines following adoption of the “stop the clock” proposal, the European Parliament is expected to begin sorting through the content changes in the second half of 2025, when Denmark holds the presidency. He said the earliest those changes to the law could be expected is the end of 2025 or early 2026.
What those content changes entail will largely depend on how parties ally themselves in the parliamentary process, according to Slot Andersen. She said the European People’s Party — which holds more than a quarter of the seats — requested the “stop the clock” measure and “generally supports” the omnibus proposal, while “several” members have expressed a need for simplification to go further. She is unsure, though, how broadly the latter opinion is shared.
The policy adviser to Peter-Hansen said that the body’s second-leading party — the Socialists and Democrats — have “made it clear that they also support simplification, but don't support deregulation, which they also perceive this omnibus proposal as being.”
She said the final outcome will depend on whether the EPP decides to form an alliance with the same parties from European Commission President Ursula von der Leyen’s governing majority — which includes the S&D party, Greens and the left-leaning Renew — or with “the extreme right,” which wants more deregulation.
The EU’s corporate sustainability reporting laws have become a recent target of congressional Republicans, who hold majorities in both the House and Senate. Sen. Bill Hagerty, R-Tenn., a member of the Senate Banking Committee, introduced a bill Wednesday that would bar U.S. companies and entities “integral to the national interests of the United States” from complying with “any foreign sustainability due diligence regulation.”
“American companies should be governed by U.S. laws, not unaccountable lawmakers in foreign capitals,” Hagerty said in a March 12 release. “The European Union’s ideologically motivated regulatory overreach is an affront to U.S. sovereignty. I will use every tool at my disposal to block it.”
The introduction of Haggerty’s bill, the “Prevent Regulatory Overreach from Turning Essential Companies into Targets (PROTECT USA) Act of 2025,” comes after House Financial Services Chair French Hill, R-Ark., argued the laws should be viewed as a “non-tariff barrier” for U.S. companies last month. Hill said the reporting requirements create “another standard that could see our biggest companies with their sales and leadership disqualified from financing or disqualified from business outside the U.S.”
