EU Parliament Votes to Freeze Sustainability Reporting Rules Amid Business Concerns

In a surprise move this May, the European Parliament voted to temporarily freeze the implementation of new sustainability reporting rules under the Corporate Sustainability Reporting Directive (CSRD). The decision comes after months of lobbying by business groups—who argued that the reporting requirements were too complex and costly, especially for small and medium-sized enterprises (SMEs).

Background

The CSRD[1], which came into force in 2024, was designed to make ESG reporting mandatory for around 50,000 companies across the EU. It requires detailed disclosures on environmental, social, and governance performance including Scope 3 emissions and supply chain impacts.

Why the Freeze?

• Business Concerns: Industry associations claimed the rules would burden companies with excessive paperwork and compliance costs— particularly as many are still recovering from post-pandemic economic shocks.
• Political Pressure: Several EU member states pushed for a pause, citing the need for more time to align national regulations and provide guidance to businesses.

What’s Next?

The freeze is expected to last until at least mid-2026, giving the European Commission time to review the rules and consult with stakeholders. In the meantime— companies are encouraged to continue voluntary ESG disclosures, but enforcement will be delayed.

Industry Reaction

While some sustainability advocates worry the delay could slow progress on climate and social goals, others say it’s a chance to streamline the rules and make them more workable for all businesses.

[1] https://www.esgtoday.com/eu-parliament-votes-to-freeze-sustainability-reporting-rules/