EP votes to scale back dramatically sustainability reporting

The European Parliament has voted to dramatically scale back the scope of EU green reporting and due diligence rules, a move that, if adopted, would likely exempt nearly all Maltese companies from the new sustainability requirements.

In a 382–249 vote, the centre-right European People’s Party (EPP) joined forces with far-right and right-wing groups to approve sweeping changes to the European Commission’s Omnibus I simplification package. The new thresholds would apply only to companies with at least 1,750 employees and €450 million in annual revenues under the Corporate Sustainability Reporting Directive (CSRD), and 5,000 employees with over €1.5 billion in revenues under the Corporate Sustainability Due Diligence Directive (CSDDD).

The changes also abolish the requirement for firms to publish climate transition plans aligned with the Paris Agreement and shift enforcement to national authorities. Companies outside the scope would no longer be obliged to provide extensive information to larger partners beyond voluntary standards.

The vote follows the collapse of a compromise deal last month between centrist and left-leaning groups. The EPP’s decision to partner with far-right parties marks a significant political shift within the Parliament and a major rollback of the EU’s sustainability agenda.

Given Malta’s business landscape, the revised thresholds mean that very few, if any, Maltese firms will fall under the EU’s sustainability reporting or due diligence requirements once the changes are finalised.

The vote was welcomed by the centre-right EPP, with Jorgen Warborn saying that the vote shows that Europe can be both sustainable and competitive. “We are simplifying rules, cutting costs, and giving businesses the clarity they need to grow, invest, and create well-paying jobs.”

In a separate statement, the Socialists blamed the centre-right’s agreement with the “anti-democratic forces on the fringes”.

“That is why we voted against the text, which would have been nothing but a further diluted version of a once-ambitious sustainability agenda. We refuse to serve as a fig leaf for a far-right agenda hiding behind the smokescreen of EPP amendments”, the Socialists said.

Negotiations with EU governments will now commence next week, with the objective of reaching an agreement by end of year.