diff --git a/sdk_container/src/third_party/coreos-overlay/changelog/bugfixes/2022-04-12-skip-ensure-sysext.md b/sdk_container/src/third_party/coreos-overlay/changelog/bugfixes/2022-04-12-skip-ensure-sysext.md
new file mode 100644
index 0000000000..26833e5092
--- /dev/null
+++ b/sdk_container/src/third_party/coreos-overlay/changelog/bugfixes/2022-04-12-skip-ensure-sysext.md
@@ -0,0 +1 @@
+- Skipped starting `ensure-sysext.service` if `systemd-sysext.service` won't be started, to prevent reporting a dependency failure ([Flatcar#710](https://github.com/flatcar-linux/Flatcar/issues/710))
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-init/coreos-init-9999.ebuild b/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-init/coreos-init-9999.ebuild
index a9e3b825e6..f623e8261c 100644
--- a/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-init/coreos-init-9999.ebuild
+++ b/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-init/coreos-init-9999.ebuild
@@ -10,7 +10,7 @@ CROS_WORKON_REPO="https://github.com"
 if [[ "${PV}" == 9999 ]]; then
 	KEYWORDS="~amd64 ~arm ~arm64 ~x86"
 else
-	CROS_WORKON_COMMIT="d76453b957f1e9ebe428c66ea6c9e3bb9a2d3489" # flatcar-master
+	CROS_WORKON_COMMIT="656181fd8e80fd10f44b8e0ec64998cfd1ff8901" # flatcar-master
 	KEYWORDS="amd64 arm arm64 x86"
 fi
 
diff --git a/sdk_container/src/third_party/coreos-overlay/sys-apps/systemd/CHECKLIST.md b/sdk_container/src/third_party/coreos-overlay/sys-apps/systemd/CHECKLIST.md
new file mode 100644
index 0000000000..2334feda57
--- /dev/null
+++ b/sdk_container/src/third_party/coreos-overlay/sys-apps/systemd/CHECKLIST.md
@@ -0,0 +1 @@
+- Check that the `systemd-sysext.service`'s `ConditionDirectoryNotEmpty` entries are correctly reflected in `flatcar-linux/init:systemd/system/ensure-sysext.service`