Corporate sustainability obligations for businesses

Extra breathing space from the EU

duurzaamheidsverplichtingen

The European Union continues to prioritize sustainability and responsible business conduct. Through various directives, it imposes specific obligations on companies to integrate social, environmental, and governance considerations into their operations. While these obligations are essential for achieving the EU’s climate goals and enhancing corporate transparency, the EU also acknowledges the need for realistic implementation. As such, it has recently decided to grant businesses more time to comply with these sustainability obligations.

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The new Directive (EU) 2025/794, published in April 2025, postpones the effective dates of several requirements. The aim is to give companies sufficient space to adapt without compromising their competitiveness or operational efficiency. At the same time, the European Commission seeks to enhance coherence across different pieces of EU legislation.

Two key corporate sustainability obligations for businesses

Currently, there are two core sustainability obligations that companies must meet:

  1. Sustainability repporting:
    Under Directive (EU) 2022/2464 companies must provide detailed reporting on their sustainability profile. This includes transparency about environmental impact, human rights, social issues, and governance structures. This obligation is part of the broader European Green Deal strategy.
  2. Sustainability due diligence:
    Directive (EU) 2024/1760 requires companies to conduct due diligence across their entire value chain. Businesses must identify, assess, prevent, and mitigate risks related to human rights and the environment—both within their own organization and among suppliers and partners.

Extra time for implementation: what changes?

With the publication of Directive (EU) 2025/794 the deadlines for these obligations are postponed. The EU acknowledges that companies—especially SMEs and those in sectors with complex supply chains—need time to adjust processes and reporting to meet the new regulatory standards.

The postponed deadlines give businesses the opportunity to:

  • properly prepare for reporting and due diligence obligations;
  • incorporate forthcoming European Commission guidelines on how to implement due diligence in practice;
  • align internal structures with various EU requirements.

New reporting deadlines at a glance

The updated timeline for sustainability reporting is as follows:

  • Large companies not already covered by the existing NFRD (Non-Financial Reporting Directive) were initially expected to report from the 2025 financial year (publication in 2026). This has now been postponed to the 2027 financial year (publication in 2028).
  • Listed SMEs (excluding micro-enterprises), as well as small non-complex credit institutions and insurance captives, also benefit from a delay. Their obligation is postponed from the 2026 financial year to 2028 (publication in 2029).

Postponement of due diligence obligations

The implementation timeline for due diligence is also being adjusted:

  • The transposition deadline for Directive 2024/1760 is postponed from 26 July 2026 to 26 July 2027.
  • The phased application, originally set for 2027 to 2029 (based on company turnover), has been revised. Member States must apply the obligations as of 26 July 2028 or 26 July 2029, depending on the size of the company.

National transposition of Directive (EU) 2025/794

Member states are required to incorporate the provisions of this new directive into their national legislation by 31 December 2025. The directive itself officially entered into force on 17 April 2025.

Conclusion

The European Union remains committed to a sustainable and transparent economy while recognising the practical needs of businesses. The postponed deadlines offer companies the opportunity to prepare structurally and set up sustainable processes that are both realistic and effective. So this postponement does not mean a postponement, but an invitation to better policies. It is now up to companies to use this extra time wisely.

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