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France’s rapid alignment with the EU omnibus “Stop-the-clock” directive

ESG
ESG

In response to growing concerns over regulatory complexity and business competitiveness, the EU adopted the “Stop-the-Clock” directive in April 2025, delaying key sustainability reporting and due diligence obligations under the CSRD and CS3D. France swiftly aligned with this shift through the DDADUE 2025 law, postponing reporting timelines, easing certain disclosure rules and softening penalties for non-compliance. These developments mark a strategic pause in the EU sustainability agenda, offering some in-scope companies time to prepare while broader reforms are negotiated.

Background – the story so far

Over recent years, the European Union (“EU”) has adopted a series of legislative initiatives under the European Green Deal agenda to enhance corporate sustainability, transparency and accountability. Among the most significant measures are the Corporate Sustainability Reporting Directive (2022/2464, "CSRD"), which replaced the Non-Financial Reporting Directive and significantly broadens the scope and depth of sustainability reporting requirements in the EU. It mandates the use of the European Sustainability Reporting Standards ("ESRS") and is designed to promote transparency and comparability across the EU. Transposition began – with France – in 2023.

Most recently, following prolonged negotiations, the Corporate Sustainability Due Diligence Directive (2024/1760, "CS3D"), was adopted. It introduces a mandatory framework requiring companies to prevent, identify and mitigate adverse human rights and environmental impacts throughout their operations, subsidiaries and value chains. The directive also obliges companies (that are not subject to CSRD) to adopt climate change mitigation transition plans and imposes civil liability in the event of non-compliance. The CS3D entered into force on 25 July 2024.

Renewed debates and regulatory fatigue

By the end of 2024, several member states and EU institutions began raising concerns about the pace and complexity of sustainability obligations, particularly for small and mid-sized enterprises ("SMEs") and companies with global exposure. In October 2024, the European Council urged EU institutions and stakeholders to urgently work toward addressing these challenges, as highlighted in the Letta and Draghi reports on European competitiveness.

France and Germany emerged as vocal proponents of this shift. In December 2024, German ministers requested a two-year postponement of the CSRD and simplifications for SMEs. On 20 January 2025, France formally asked for the indefinite postponement of the CS3D, citing concerns over the impact on EU competitiveness due to the uneven international regulatory landscape. France also supported a two-year delay of the CSRD and proposed centralized group-level compliance and simplified climate-focused reporting. These positions were backed by other Member States including Austria, the Czech Republic, Ireland, Hungary, Croatia and the Netherlands. The following day, at the ECOFIN Council meeting, EU finance ministers called for a reduction in corporate reporting obligations, simplification of sustainability frameworks and removal of double materiality from reporting rules.

Omnibus proposal and the adoption of the "Stop-the-clock" directive

In light of these developments, European Commission President Ursula von der Leyen announced at the World Economic Forum in Davos on 21 January 2025 the launch of an omnibus initiative, ostensibly to simplify the CSRD and CS3D. The Commission presented formal legislative proposals on 26 February 2025 as part of two omnibus simplification packages.

The "Stop-the-clock" directive was subsequently adopted by the European Parliament on 3 April 2025, followed by the Council of the EU on 14 April 2025 and published in the Official Journal of the EU on 16 April 2025. It formally delays the application of CSRD obligations by two years for large companies that had not yet begun reporting, as well as for listed SMEs. It also postpones the transposition deadline and the initial application phase of CS3D by one year for the largest companies. The directive entered into force on 17 April 2025 and must be transposed by member states by 31 December 2025. Please see here, here and here for our briefings on the content of the omnibus simplification package and follow updates on our ESG regulatory alerts tool.

France transposes the “Stop-the-clock” directive through the DDADUE 2025 Law

In this context, France acted quickly to transpose the directive into national legislation by adopting the law no. 2025-391 containing various provisions to align French law with EU law in economic, financial, environmental, energy, transport, health and movement of persons matters ("DDADUE 2025 law"). The law was adopted following a parliamentary compromise and was validated by the French Constitutional Council before its publication in the Official Journal of the French Republic.

The DDADUE 2025 law introduces several notable measures. It defers sustainability reporting obligations for companies in the second and third waves of the CSRD’s phased application. For large, non-listed companies meeting two out of three thresholds (250 employees, €25 million in assets, €50 million in turnover), the first reporting obligation is postponed to 2028 for financial year 2027. Listed SMEs will begin reporting in 2029 for financial year 2028.

For companies already required to report in 2025, on financial year 2024, the law allows the omission of certain information based on the phased-in list of ESRS requirements. Furthermore, companies may omit information if disclosure would seriously harm their competitive position, provided the omission does not impair a fair and balanced understanding of their situation. Such information must, however, be submitted to the French Financial Markets Authority.

The law also relaxes some sanctions tied to sustainability obligations. Specifically, it removes certain criminal penalties applicable to company directors for failing to appoint or convene a sustainability auditor (or an independent third party body) or for obstructing the auditor’s (or the independent third party body’s) mission.

Time bought, reform ahead

The "Stop-the-clock" directive (and implementing France’s DDADUE 2025 law) provides breathing space for companies, offering time to EU institutions for more comprehensive negotiations on the substantive revisions of the CSRD and CS3D. A rapporteur has already been appointed within the European Parliament to lead the examination and negotiation of the proposed amendments, including stakeholder consultations. The Council has begun reviewing the broader omnibus simplification package and the conclusions of its 20 March 2025 meeting reaffirm the political will to reduce regulatory burdens urgently.

While the immediate postponement of application of the CSRD and CS3D provides relief, it also signals a transition period during which substantive obligations are not clarified and a lack of visibility for companies on the extent of compliance efforts needed in tomorrow’s world. This is exacerbated by the need for the directive to be transposed in every EU member state which creates greater uncertainty for businesses operating across the EU and until the omnibus simplification packages are agreed and adopted.

Our global ESG group brings together a multidisciplinary global team that provides clients with best-in-market support. We are following developments relating to ESG regulation, so please get in touch if you would like to discuss.

Stay ahead with timely curated developments, insights and thought leadership on ESG regulation with our ESG Regulatory Alerts tool. 

This note is intended to be a general guide to the latest ESG developments. It does not constitute legal advice.



Authored by Christelle Coslin, and Margaux Renard.

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