EU delays CSRD reporting for non-EU companies

The European Commission has announced a delay in adopting sustainability reporting standards for non-EU companies under the Corporate Sustainability Reporting Directive (CSRD). The decision pushes implementation back to at least October 2027 and forms part of the European Union’s wider effort to simplify regulations and reduce administrative burdens on companies.

Initially planned for adoption by mid-2024, the European Sustainability Reporting Standards (ESRS) for large non-EU companies were already postponed once to June 2026. They will now be delayed further, with the European Commission confirming that no delegated acts on this matter will be adopted before October 2027.

This development is part of the Commission’s “simplification agenda,” which identifies more than 100 legislative acts across the European Union to be deprioritised or delayed. The move reflects the EU’s attempt to balance sustainability ambition with competitiveness, especially amid global regulatory developments and transatlantic negotiations.

What the delay means

Large non-EU companies that operate in EU markets will not need to comply with CSRD reporting requirements until after October 2027. These requirements will be set out in the European Sustainability Reporting Standards (ESRS) for third-country undertakings, which the Commission has now deprioritised.

This delay gives affected companies – particularly multinationals from the United States, the United Kingdom, and Asia – more time to prepare for compliance. It does not change the long-term direction of EU sustainability regulation. Companies will still need to disclose information on social and environmental issues as part of their environmental, social, and governance (ESG) disclosures, including climate risks, human rights, and resource use, once the new delegated acts are adopted.

In short, the EU remains committed to corporate sustainability and transparency, but wants to give businesses more time to adapt and align with frameworks such as the Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy.

Which companies are affected

The delay only applies to the non-EU reporting standards. All other CSRD obligations for EU-based companies and listed entities remain in effect. The CSRD applies to companies above a certain size, as mandated by EU law.

Additionally, all companies listed on EU regulated markets are also required to comply with the CSRD, regardless of size.

When implemented, these companies, including listed companies, will need to prepare CSRD reports that meet the same assurance and transparency standards as EU companies. Reports must cover the entire value chain, including environmental issues such as resource use, pollution, and circular economy efforts, as well as social and human rights practices and governance policies.

Although the Omnibus package currently being debated could raise the employee threshold from 250 to 1,000 and simplify reporting, most large companies, medium sized enterprises, and financial market participants will still be required to disclose their sustainability performance once the new delegated acts are adopted.

What remains in force

While the delegated acts for non-EU undertakings are delayed, the core CSRD obligations for large companies and listed entities in the EU are already live.

The Corporate Sustainability Reporting Directive, adopted by the European Parliament and the Council in 2022, builds on the Non-Financial Reporting Directive (NFRD). It requires detailed sustainability information in management reports and introduces double materiality – meaning companies must assess both how sustainability issues affect their business and how their activities impact people and the environment.

The CSRD applies in phases:

• 2024: The first companies required to report under the CSRD are those already subject to the NFRD.
• 2025: Other large EU companies not previously covered join the scope.
• 2026: Listed SMEs (excluding micro enterprises) start reporting, with an optional one-year delay.
• 2028: Large non-EU companies meeting the thresholds will report once the new ESRS standards are adopted.

These rules are now part of national law in most EU member states and form the cornerstone of the EU’s sustainable finance framework.

How in-scope companies can prepare

Even with the delay, companies in scope should not pause their reporting process. The European Commission’s timeline shift gives firms a valuable opportunity to establish internal structures and processes that can withstand scrutiny under CSRD compliance and independent assurance services providers. Each company must adapt its reporting processes to meet the new requirements introduced by the CSRD.

Preparation should focus on several key areas. Adopting a strategic approach to sustainability reporting can help turn compliance into a competitive advantage:

1. Conduct a double materiality assessment
   Under the Corporate Sustainability Reporting Directive, companies must evaluate both how sustainability issues affect financial performance and how their operations impact people and the environment. This exercise helps firms focus on material topics rather than attempting to disclose every metric available.
2. Strengthen governance and oversight
   CSRD reports require evidence of board-level engagement with sustainability issues. Large companies should assign clear accountability for ESG data management and align sustainability governance with risk and finance functions.
3. Improve data collection and quality
   Sustainability reporting requires accurate, auditable data across the entire value chain. Firms should begin mapping where data resides, especially across subsidiaries, suppliers, and business partners, and ensure consistent formats for collection and validation. Engaging with stakeholders, including clients and investors, is essential to facilitate data sharing and improve reporting quality.
4. Integrate global frameworks
   To avoid duplication, companies should align CSRD metrics with frameworks such as the ISSB standards, the Sustainable Finance Disclosure Regulation, and the EU Taxonomy. A consistent reporting structure improves comparability and reduces the risk of non-compliance across jurisdictions.
5. Prepare for assuranceFrom 2026, CSRD reports will require limited assurance by independent assurance service providers, transitioning to reasonable assurance in later years. Building internal controls, documentation trails, and verification processes now will make future external audits smoother.

In practical terms, this means investing in systems that link sustainability data directly to financial data, enabling cross-department collaboration. For firms with complex international operations, readiness will also depend on training teams across member states and subsidiaries in CSRD compliance and national law transpositions.

How ESG software can help

The delay in European Sustainability Reporting Standards gives companies an opportunity to digitise their reporting processes and adopt software platforms capable of managing large, complex datasets. Manual data handling through spreadsheets is unlikely to meet the accuracy, traceability, and assurance needs required by CSRD compliance.

ESG platforms such as Sweep offer integrated solutions designed to streamline every stage of the sustainability reporting process. By centralising data, automating workflows, and applying analytics, companies can improve both efficiency and confidence in their disclosures.

1. Materiality assessments
   Software tools can automate stakeholder surveys and issue scoring, helping companies conduct consistent double materiality assessments that align with ESRS and other EU frameworks.
2. Data collection and validation
   Modern ESG platforms allow firms to assign responsibilities, import data from multiple sources, and validate figures through built-in quality controls. This reduces errors and improves the reliability of disclosed sustainability information.
3. Monitoring progress
   Companies can use real-time dashboards to track reporting progress, identify missing information, and send automated reminders to contributors. This helps ensure full coverage across subsidiaries and business units.
4. Internal controls and assurance readiness
   Software solutions enable automatic tracking of data changes, approvals, and supporting evidence, simplifying audits by independent assurance service providers. Firms can demonstrate compliance with delegated acts and show how sustainability information has been verified.
5. Disclosure creation and submission
   With AI-assisted drafting tools, ESG software can accelerate the creation of management reports and narrative sections required under the sustainability reporting directive CSRD. These tools also help generate machine-readable files for submission to EU databases, ensuring consistency and regulatory alignment.

What’s next for the CSRD and EU sustainability regulation

The European Commission’s decision to delay the delegated acts related to non-EU companies and listed SMEs is part of a broader recalibration of the European sustainability agenda. The simplification strategy reflects political pressure to reduce administrative costs while maintaining Europe’s leadership in corporate sustainability and sustainable finance.

While the details are still being negotiated, the direction of travel remains clear: the European Union continues to promote transparent, reliable sustainability reporting as a foundation for the green transition.

As Sweep’s CEO and Co-Founder, Rachel Delacour has said:

“The EU’s delay on sustainability reporting for non-EU companies doesn’t change the ambition at its core: the business case for strong sustainability data is as clear as ever. Regulations will come and go. The business winners aren’t waiting for them. They’re already acting, because it’s good business.

Transparent, detailed and auditable sustainability data isn’t a compliance box to tick. It’s a proven competitive edge. It helps companies manage risk, attract capital, optimize operational cost, and earn consumer trust. The companies we work with see every day that ESG credentials are being demanded in RFPs regardless of any legal deadline.”

For companies – both EU-based and international, the next few years will be crucial. Firms that use the additional time to embed sustainability into their strategy, governance, and risk management will not only achieve compliance but strengthen resilience and investor confidence. Those that delay preparation risk non-compliance, reputational damage, and reduced access to capital as sustainability disclosure becomes a market expectation.