ESG Strategy: A summer slowdown, or a chance to catch up?

Now that business tends to slow down during the summer months, it’s the perfect time to rethink your ESG strategy and priorities. 

With recent political shifts in Europe and a broad legislative slowdown in terms of ESG, the long-anticipated EU Omnibus Simplification Package proposal was published on February 26, 2025. The first part of this package, being the so-called “Stop-the-Clock” Directive, entered into force on April 17, 2025 and is to be transposed into national law by the Member States by December 31, 2025. Even though this legislation delays several regulatory deadlines and streamlines certain requirements, that does not mean ESG strategy can hit pause.

The summer offers a critical opportunity to reassess, re-sequence, and get ahead while the pressure is (temporarily) low. Please find herewith a recap on how these changes affect CSRD, CS3D (CSDDD), EU Taxonomy and EUDR, and what actions companies should take now to stay in control.

CSRD: Fewer companies in scope, but expectations remain high

The Corporate Sustainability Reporting Directive (CSRD) was at the center of the Omnibus reforms. The scope has now been significantly narrowed: only EU companies with more than 1,000 employees—in addition to meeting a turnover above 50 million EUR or a balance sheet total above 25 million EUR —will be required to report under CSRD. 

Moreover, through the “Stop-the-Clock” measure, the European Commission has officially delayed reporting deadlines for companies that would have come into scope in 2025 by two years. The second wave of companies (large EU companies) will now report in 2028 in respect of the 2027 financial year. The third wave of companies (listed SMEs) will follow by reporting in 2029 in respect of the 2028 financial year. No change is foreseen for the first wave (large listed companies) and the fourth wave of companies (non-EU companies), which remain due to report for the 2024 and 2028 financial years, respectively. In line with this, Belgium has already taken steps to transpose the directive. A legislative proposal has been approved by the Council of Ministers and is currently under review by the Council of State. 

In addition, the ESRS (European Sustainability Reporting Standards) are being overhauled. The European Commission intends to adopt a Delegated Act to simplify the first set of standards. A streamlined version is expected by October 2025. Stakeholders, including companies, are invited to participate in a public consultation open until September 29, 2025, allowing them to provide feedback on the proposed changes via EFRAG’s online platform.

What does this mean?

Even if you are no longer legally required to report (for now), stakeholder and investor expectations have not diminished. Companies still in scope should treat this summer as an ideal moment to finalize their materiality assessments, engage internal teams, and refine their data strategies. Those out of scope may still opt to voluntarily align with simplified standards - especially as the European Commission has introduced the Voluntary Sustainability Reporting Standard for SMEs (VSME), and attention to voluntary disclosures is growing amongst banks, partners, and global clients. 

CS3D (CSDDD): A softer start, but supply chain diligence remains a concern 

The Corporate Sustainability Due Diligence Directive (CS3D) has also been impacted by the legislative slowdown. Under the updated timeline, EU Member States now have until July 2027 to transpose CS3D into national law. Companies in the first application wave — including EU companies with more than 5,000 employees and 1.5 billion EUR in turnover, as well as non-EU companies generating turnover above this threshold within the EU — will now be required to comply as from July 2028, one year later than previously planned.

Although this delay offers some breathing space, it should not be mistaken for a reprieve. The obligations are wide-reaching and complex, especially regarding human rights and environmental due diligence. Even if, depending on the final EU decision, the scope may initially be limited to direct (Tier 1) suppliers rather than the broader global supply chain, this legislation will likely affect the entire supplier base. 

What does this mean?

Companies should use the additional time granted to start mapping supply chain risks, evaluating potential exposure, and piloting risk management tools that will eventually form part of a legally required diligence system. The summer slowdown is a perfect time to begin engaging your teams, especially if your value chain stretches into high-risk geographies or sectors.

EU Taxonomy: Realigned scope and simpler metrics

The EU Taxonomy Regulation is expected to be realigned with the CSRD changes through the proposed Omnibus reforms. If adopted, mandatory Taxonomy reporting would apply only to companies with more than 1,000 employees and either 50 million EUR in turnover or 25 million EUR in assets. Companies below this threshold may still choose to report voluntarily. 

On July 4, 2025, the European Commission adopted a new Delegated Act to simplify the application of EU Taxonomy. This Delegated Act applies from 1 January 2026, meaning it will be applicable for the 2026 reporting cycle covering the 2025 financial year. However, companies have the option to continue applying the current rules for financial year 2025. The Delegated Act introduces a materiality threshold to allow undertakings to focus on those activities that are material for their business. More specifically, companies will be required to report on taxonomy-eligible activities only if they represent more than 10% of turnover, CapEx, or OpEx – to be assessed separately for each KPI. The reform also aims to simplify technical alignment, including less burdensome DNSH (Do No Significant Harm) assessments and streamlined GAR (Green Asset Ratio) calculations. 

What does this mean?

Many companies may find themselves newly exempt from taxonomy reporting. However, those that remain in scope should take this opportunity to review which activities exceed the new materiality thresholds and focus on accurate classification. Aligning with financial reporting teams now will make future reporting cycles easier.

EUDR: Implementation timeline remains unchanged

In contrast to the above, the EU Deforestation Regulation (EUDR) has not, until further notice, been delayed or softened by the Omnibus reforms. The EUDR will be applicable and enforceable as of December 30, 2025 for large and medium companies and June 30, 2026 for micro and small enterprises. Under the EUDR, in-scope companies will need to prove that certain commodities (such as palm oil, soy, rubber, cocoa and coffee) that are imported into, traded within and exported out of the EU are deforestation-free and compliant with local laws. 

Although some industries and trade groups have requested phased implementation or simplified criteria, the Commission has held firm so far.

What does this mean?

If your company deals in any of the covered commodities -either directly or via suppliers - you must act now. Mapping your supply chain and verifying source legality are time-intensive tasks that must be well underway by the end of summer if you want to meet the fast approaching compliance deadline.

Conclusion

By acting now, companies can reduce last-minute pressure, spread workloads more evenly, and integrate ESG into core business functions before external pressure returns. Whether it is about refining your materiality analysis under CSRD, preparing traceability under EUDR, or evaluating your financial taxonomy exposure, this summer is a strategic window to get your house in order.