The postponement concerns two important laws: the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Both rules would obligate companies to report more extensively on their social and ecological practices, and their consequences. Companies would also henceforth be held partly responsible for abuses by their suppliers and customers in their global supply chains.
By postponing the introduction of these rules, time is created to reassess the practical consequences. Several Members of the European Parliament and EU countries feel that the proposals demand too much from companies. They point out that especially smaller and medium-sized enterprises struggle with the administrative burdens that these laws entail.
The 'stop-the-clock' proposal was supported by a large majority in Parliament. At the same time, some members emphasized that the delay must not mean that European ambitions in sustainability are abandoned. They called for a careful balance between economic feasibility and social responsibility. Other factions, however, speak openly about 'rolling back the Green Deal.'
European companies also have mixed feelings. On one hand, many companies welcome the extra delay because it gives them more time to adapt. On the other hand, uncertainty and shifting rules create long-term insecurity. Companies primarily want to know where they stand.
The European Commission now has the space to adjust or refine both laws. Commissioners can use this extra time to develop new policies that better align with the economic situation in Europe. According to proponents, this offers opportunities to better support European businesses without compromising sustainability. Opponents say that this is only 'extra time for reflection,' not 'new decisions.'
The postponement comes at a time when the European Union wants to strengthen its position as an economic superpower. Former EU Commissioner Mario Draghi recently advised that Europe must act more decisively between the power blocs of China and the US. According to Draghi, there is a need for clear priorities and less complex regulation for companies.
For now, the vote in Parliament means that companies do not yet have to comply with the extra requirements from the CSRD and CSDDD. In the coming months, it will become clear whether the postponement leads to changes in the rules, and whether the EU will indeed set a course change in the tension between sustainability and economic growth.