European Parliament backs lighter sustainability reporting and due diligence rules

The European Parliament has voted in favour of easing sustainability reporting and due diligence obligations for companies across the EU, with 382 votes in favour, 249 against and 13 abstentions. The revised rules would apply only to large businesses with more than 1,750 employees and a turnover above €450 million. Smaller firms will be exempt, and sector-specific reporting will become voluntary.

For due diligence, only very large corporations—those with over 5,000 employees and an annual turnover exceeding €1.5 billion—will be covered. These firms must take a risk-based approach to monitoring social and environmental impacts but will no longer be required to produce transition plans aligned with the Paris Agreement. They will remain liable at the national level and must compensate victims for damages if they fail to meet due diligence standards.

The package also introduces a new digital portal providing free access to templates, guidelines and EU reporting information. Rapporteur Jörgen Warborn stated that the reforms strike a balance between sustainability and competitiveness, reducing bureaucracy while helping companies grow and invest. Negotiations with EU governments will begin on 18 November, with final adoption targeted by the end of 2025.