The European Parliament has approved a provisional agreement with EU governments on revised sustainability reporting and due diligence rules for companies, scaling back obligations in a bid to boost competitiveness while maintaining core protections.
Under the new framework, far fewer firms will be required to produce sustainability reports. The rules will apply only to EU companies with more than 1,000 employees and net annual turnover exceeding €450 million. Non-EU companies will fall under the regime only if they generate more than €450 million in EU turnover, with additional thresholds applying to their subsidiaries and branches.
Reporting requirements will be significantly simplified, with sector-specific disclosures becoming voluntary. Smaller companies will be shielded from excessive demands, as larger firms will not be allowed to shift reporting responsibilities onto business partners with fewer than 1,000 employees. To support compliance, the European Commission will set up a digital portal offering templates and guidance on EU and national requirements.
Due diligence obligations will be further narrowed, applying only to very large companies employing over 5,000 staff and generating more than €1.5 billion in annual turnover. Transition plans aligning business models with sustainability goals will no longer be mandatory. Companies that fail to comply could face fines of up to 3% of global turnover. The due diligence rules will apply from July 2029.
