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As an investor association committed to a sustainable and responsible capital market, VBDO expresses deep concern over the recent approval by the European Parliament of the “stop-the-clock” mechanism under the EU Omnibus proposal.
This proposal delays the implementation of the Corporate Sustainability Reporting Directive (CSRD) by two years and the Corporate Sustainability Due Diligence Directive (CSDDD) by at least one year. While presented as a means to reduce administrative burden, these developments de facto introduce significant uncertainty, penalise responsible businesses, and risk undermining the EU’s global leadership on human rights and environmental due diligence.
Timely and reliable data is essential for investors to assess sustainability risks when making investment decisions. As EU policy increasingly emphasises the responsibility of businesses to report on and address sustainability issues, capital markets depend on this information to align portfolios with long-term sustainability objectives. Weakening the legislative framework would undermine both the transition efforts of companies and the ability of investors to allocate capital in a responsible and financially sound manner.
The joint investor statement by UN-PRI, Eurosif and IIGCC highlights the essential role of CSRD, CSDDD and the EU Taxonomy in enabling responsible investment and safeguarding long-term financial stability.
Business certainty, risk management, and forward-looking regulation
Regulatory stability is crucial for businesses that have already invested in due diligence frameworks and sustainability reporting. The stop-the-clock approach penalises frontrunners and favours laggards instead. This creates uncertainties and an uneven playing field.
Far from offering clarity, companies face a shifting legal landscape that hinders long-term planning and impedes risk management. Moreover, this shift also undermines critical efforts to build resilient supply chains.
The global and strategic business case for strong standards
The EU has positioned itself as a global leader in responsible business conduct. Delaying core directives like the CSDDD and CSRD jeopardises this leadership.
Strong sustainability standards are not a threat to competitiveness; they are a strategic advantage. European companies that lead on sustainability are better prepared for global markets which are increasingly shaped by consumer, regulatory, and investor expectations. These directives help identify and mitigate material risks linked to climate change, nature and biodiversity loss, and human rights.
Investors already require more information than legal minimums. Weakening EU standards risks widening the gap between investor expectations and regulatory requirements.
A harmful precedent and a mischaracterised simplification
The Omnibus package sets a worrying precedent, suggesting that adopted laws can be reversed before implementation. This undermines trust in EU policymaking and weakens future regulatory commitments.
Framing the delays as administrative simplification misrepresents their effect. Genuine simplification would streamline processes—not suspend essential due diligence and transparency obligations. These rollbacks risk eroding both business and investor confidence.
Targeted support—such as technical guidance and digital tools—is a better solution than legislative delays.
Conclusion: the need for strong, stable EU leadership
As final negotiations around the Omnibus package continue, VBDO urges EU policymakers—in particular the European Council—to resist further dilution of critical sustainability legislation.
We call on the Council to reject further steps that would harm the CSRD and CSDDD, and instead uphold strong, stable regulatory frameworks that promote responsible business conduct, investor confidence, and action on climate change, biodiversity loss, and human rights.
Now more than ever, Europe must stand firm in upholding high sustainability standards. Business and investor leadership have shown what is possible. Policymakers must meet that ambition.
DISCLAIMER: This statement was developed by VBDO but does not necessarily represent the views of its members, either individually or collectively.
