CSRD and CSDDD in Ireland

Over the past year, developments around the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) have created significant legal uncertainty in Ireland. As a result, it has become increasingly difficult for businesses and advisors to stay informed. Our ESG team provides a snapshot of the current state of play and outlines the key developments Irish organisations need to be aware of.

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What you need to know

• The EU’s “Stop-the-Clock” directive, now in force, delays CSRD and CSDDD application for many companies and extends the CSDDD transposition deadline to July 2027.
• Proposed Omnibus simplification measures aim to reduce scope and reporting burdens under both directives, but remain politically contentious and subject to negotiation.
• Further legislative developments are expected, including Irish implementation of “Stop-the-Clock” and amendments to current CSRD regulations to clarify and narrow company obligations.

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Introduction

Recent developments around the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), both nationally and at EU level, have created significant legal uncertainty in Ireland. Shifting timelines, evolving obligations, and ongoing political negotiations at EU level, together with unexpected complexities in the Irish transposition of the CSRD, have made it difficult for businesses and advisors to stay informed.

Background

The CSRD and the CSDDD are central pillars of the European Green Deal, which aims to make Europe climate-neutral by 2050.

The CSRD officially entered into force in the EU on 5 January 2023. Its purpose is to improve access to high-quality, reliable and comparable sustainability information from businesses across the EU and beyond. It establishes a harmonised EU-wide framework that will require many companies to make detailed annual disclosures on ESG matters. Ireland transposed the CSRD into national law on 6 July 2024.

While the CSRD is focused on reporting obligations, it is complemented by the CSDDD, which officially entered into force in the EU on 25 July 2024. The CSDDD introduces mandatory due diligence duties for many large companies. It compels them to identify, prevent, mitigate and end adverse impacts on human rights and the environment across their own operations and in their chains of activities. The CSDDD has not yet been transposed into Irish law.

Together, the CSRD and the CSDDD seek to enhance corporate transparency, accountability, and responsible business conduct throughout the EU.

Irish transposition of the CSRF

The CSRD was transposed into Irish company law by the European Union (Corporate Sustainability Reporting) Regulations 2024 (the Regulations), as later amended by the European Union (Corporate Sustainability Reporting) (No.2) Regulations 2024.

The Regulations gave rise to several unexpected, and perhaps unintended, surprises. They gold-plate the CSRD by applying sustainability reporting obligations to companies which, based on the CSRD, had been expecting to find themselves outside scope. They also extend the scope of sustainability reporting obligations and accelerate the commencement of those obligations. Based on the CSRD, companies had been anticipating more limited reporting requirements and a longer lead-in time to prepare. The Regulations also unduly limit exemptions for group reporting. Read our previous article summarising the Irish approach to transposition of the CSRD.

Anomalies in the Irish transposition of the CSRD created confusion regarding the legal obligations of Irish companies around sustainability reporting. As a result, there has been significant stakeholder engagement – including by affected companies, industry bodies, audit firms and law firms – with the Department of Enterprise, Trade and Employment about the Regulations. Those efforts have focused on seeking clarification and possible correction of the apparent anomalies in the legislation. However, the most significant issues remain unresolved, leaving many Irish companies uncertain about their compliance obligations.

Omnibus propsals – ‘Stop-the-Clock’

Ongoing uncertainty in Ireland has been further intensified in recent months by the latest EU developments on the CSRD and the CSDDD. The European Commission published its “Omnibus” proposals in February 2025, with the aim of simplifying the corporate sustainability requirements in the CSRD and the CSDDD, among other matters. The Omnibus proposals were driven by a number of factors, but key issues included the apparent cost and burden of compliance with complex and far-reaching legislation. The Omnibus proposals therefore included proposals to reduce the application of the CSRD and scale back the extent of obligations under the CSRD and the CSDDD.

The Omnibus proposals, insofar as they relate to the CSRD and the CSDDD, have been split across two separate directives.

The first directive is the so-called ‘Stop-The-Clock’ directive, which entered into force on 17 April 2025. Its purpose is to delay the application of certain requirements under the CSRD and the CSDDD. That delay provides time for the second directive, containing the more substantive CSRD and CSDDD simplification proposals, to work its way through the EU legislative process before any further obligations under the current forms of the CSRD or the CSDDD come into effect.

The ‘Stop-The-Clock’ directive makes the following changes:

• CSRD: The existing reporting obligations of all large public-interest companies that have an average number of employees exceeding 500 remain unchanged. For all other companies within the scope of the CSRD, the ‘Stop-The-Clock’ directive defers the commencement of their reporting obligations for two years.
• CSDDD: The national transposition deadline for the CSDDD has been extended from 26 July 2026 to 26 July 2027. The original date of 26 July 2027 for the commencement of the application of obligations under the CSDDD for the first phase of in-scope companies has also been deferred until 26 July 2028.

The ‘Stop-The-Clock’ must be transposed into Irish law by 31 December 2025.

Omnibus proposals – simplification

The simplification proposals include the following:

CSRD

	Current Position	Proposed Omnibus Amendment
Reduction in scope of reporting EU companies	CSRD applies to all large EU undertakings.	Only large EU undertakings with 1,000+ employees would be in scope.
Reduction in scope of reporting third country companies	Third country reporting obligations apply to certain EU subsidiaries and branches of a third country company if, at group level, the group generated turnover of more than €150 million in the EU for two consecutive financial years.	Third country reporting obligations would apply only if the group generated turnover of more than €450 million in the EU for two consecutive financial years.
Value chain cap	In-scope companies are required to retrieve data from all relevant companies within their value chain.	A limit would be placed on the extent of information that may be sought from value chain partners not within the scope of the CSRD.
European Sustainability Reporting Standards	Certain ESRS have already been adopted, with the Commission to adopt additional ESRS for certain sectors.	The Commission would revise the ESRS with the aim of clarifying provisions deemed unclear, improving consistency with other legislation and reducing the number of data points. Sector-specific standards would be removed.

CSDDD

	Current Position	Proposed Omnibus Amendment
Supplier monitoring	In-scope companies are required to assess suppliers annually.	In scope companies would be required to assess suppliers every five years.
Financial services	Due diligence requirements for Financial Institutions (FIs) under consideration.	Due diligence requirements for FIs no longer in consideration.
Contract termination	In-scope companies are required to terminate contracts for non-compliant suppliers as a last resort measure.	Companies would not be required to terminate contracts for non-compliant suppliers as a last resort measure.
Penalties / civil liability for non-compliance	Harmonised penalties and civil liability for non-compliance are specified in the CSDDD and are to be transposed by Member States.	Harmonised EU rules for civil liability would be deleted. The minimum cap for penalties, 5% of turnover, would be deleted.

The simplification proposals are dividing opinion, both politically and among interested stakeholders. Some welcome the proposals as a necessary recalibration to shield EU companies from overly burdensome and costly compliance and to protect the EU’s global competitiveness. Others claim the simplification does not go far enough and would rather see the CSRD and CSDDD scrapped entirely. At the other end of the spectrum, some are concerned that the proposals undermine the EU’s broader sustainability goals, and that the EU should stay the course regarding the current frameworks.

To date, the CSRD and the CSDDD have been addressed as two separate, albeit complementary, pieces of legislation. The Omnibus simplification directive now inextricably links the two as they continue through the EU legislative process. This, combined with significantly diverging political views on the direction of reform, will no doubt create complexity as the final text is negotiated. Compromise may be difficult, so businesses should be aware that while the proposals signal a shift toward streamlining and clarity, the outcome and the timeline remain uncertain.

Next steps

As of June 2025, the legal and regulatory landscape for corporate sustainability in Ireland remains unsettled. While the CSRD is now in force and transposed into Irish law, significant uncertainties persist due to anomalies in the Regulations.

The ‘Stop the Clock’ directive should provide some welcome breathing space for many companies grappling with preparation for CSRD reporting. However, it is vital to keep a watching brief on the legislative developments in the EU around more substantive simplification of corporate sustainability requirements.

We will continue to monitor the progress of the remaining Omnibus proposals as they make their way through the EU legislative process. In the meantime, we will await Irish transposition of the ‘Stop the Clock’ directive. The Department of Enterprise, Trade and Employment has confirmed that the Minster is focused on “quickly implementing the EU’s Stop the Clock” and will also shortly be amending the existing Irish legislation governing CSRD to further clarify and reduce the scope of companies covered. Those two developments, when they come to pass, will hopefully bring some much-needed clarity for businesses on the extent and timing of their obligations.

However, as the ESG goalposts continue to shift, it can be increasingly difficult for organisations to understand their obligations. Please get in touch with a member of our ESG or Corporate Governance teams to discuss how we can help.

The content of this article is provided for information purposes only and does not constitute legal or other advice.