Uneven Stop-the-Clock Provisions Throughout Europe on Sustainability Reporting
As discussed in a previous article, the European Union is seeking to "bring competitiveness and climate goals together," and therefore launched a reform package—the Omnibus package—regarding sustainability reporting and investment regulations. The reforms will modify and streamline the Corporate Sustainability Reporting Directive ("CSRD") and the Corporate Sustainability Due Diligence Directive ("CS3D"), as well as refine the EU Taxonomy framework.
In this context, on April 17, 2025, European Directive (EU) 2025/794 of April 14, 2025 ("Stop-the-Clock Directive") entered into force. This directive postpones the implementation of the CSRD reporting requirements for companies that are due to report in 2026 and 2027 (so-called wave 2 and 3 companies), as well as pushes back the first phase of implementation of the CS3D.
On April 30, 2025, France adopted a new regulatory provision included in a Law no. 2025-391 (the "DDADUE Law") to stop the clock and push back the implementation of the CSRD for waves 2 and 3 by two years, thus aligning with the Stop-the-Clock Directive.
But what happens for "wave 1" companies? They do not benefit from the Stop-the-Clock provisions, so they should have issued, in 2025, a first sustainability report for 2024 and are, at this juncture, expected to carry on and prepare for a new sustainability statement for year 2025, to be issued in 2026. Pursuant to the French DDADUE Law, these companies may omit, for the financial years 2024-2026, the information mentioned in Appendix C of the European Sustainability Reporting Standards ("ESRS") 1 (phased in disclosure requirements), taking into account the provisions applicable regarding employee thresholds.
Because the CSRD is a directive, its provisions had to be transposed into national law to become implementable. Some EU Members States, like France, have transposed the CSRD, which has therefore been implemented by the largest companies headquartered in such countries and subject to the "wave 1" requirements. The transposition deadline for the CSRD, which was July 6, 2024, has not been modified by the Stop-the-Clock Directive. This means that the EU Member States that still have not transposed the CSRD, such as Germany or the Netherlands, are in breach of their transposition obligations. Sanctions are very unlikely, however, because the provisions of the CSRD are scheduled to be modified by the Omnibus package.
But the situation is creating regulatory confusion and, potentially, competitiveness issues for companies that have to implement the CSRD while their counterparts in other EU jurisdictions are still exempt due to lack of transposition. In France, large companies have included a CSRD-compliant sustainability statement in their annual report for year 2024, issued during the first months of 2025. Such statements, often over 150-pages long, were generally the fruit of time-consuming and costly efforts to gather the data required under applicable ESRS and carefully draft the wording to comply with reporting requirements, while avoiding greenwashing litigation risks.
Also, pending the modifications of the CSRD provisions by the Omnibus, which are still vague at this stage, some efforts are still being made to align national regulations with the current provisions of the CSRD. For instance, the French government launched in April a public consultation on a draft decree regarding carbon credits, which provides for transferability of such credits to "align with CSRD requirements"—a rather generous interpretation of ESRS 1 reporting requirements on climate change.
Companies subject to the CSRD may find it difficult to assess whether to pause their efforts or carry on in a context of regulatory uncertainty. Experienced counsel can assist in navigating these difficult issues.
