By Mrinmay Dey and Kate Abnett
Brussels — The EU reached a deal on Tuesday to scale back its corporate sustainability laws after months of pressure from companies and governments, including the US and Qatar.
The alters agreed to by EU governments and the European parliament would weaken such rules for a large majority of businesses now covered. They come after criticism from some industries that EU red tape and strict regulation hinder competitiveness with foreign rivals.
“This agreement brings historic cost reductions,” parliament neobtainediator Jorgen Warborn declared. He noted that the cuts went further than those initially proposed by the European Commission, which it had estimated would reduce companies’ administrative costs by €4.5bn.
The push to weaken the laws has dismayed environmental campaigners, some investors and governments, including Spain, which have urged Brussels to maintain the rules to support European priorities on sustainability and human rights.
‘Not enough’
A spokesperson for US oil and gas major ExxonMobil declared the alters “didn’t go nearly far enough“, noting that the EU’s due diligence law would still apply to foreign companies.
“The Trump administration has built clear this is a non-starter for trade talks, and we see forward to a common-sense resolution in the near future,” the spokesperson declared.
Under the alters, the EU will limit its corporate sustainability due diligence directive (CSDDD) to only the largest EU corporations — those with more than 5,000 workers and an annual turnover of at least €1.5bn. The same rules will cover foreign companies whose EU turnover exceeds that amount. They could face fines of up to 3% of net global turnover for breaching the law, which requires companies to repair human rights and environmental issues in their supply chains.
The EU also delayed the deadline to comply with CSDDD — which came into force last year — to mid-2029 and dropped a requirement for companies to adopt climate alter transition plans.
“This is counter-productive for businesses, weakens accountability, and jeopardises the EU’s plans and objectives on climate and the industrial transition,” declared Julia Otten, senior policy officer at law firm and advocacy group Frank Bold.
Scrap due diligence
The US and Qatar have pressured Brussels to scale back the due diligence law, warning that the rules risked disrupting liquefied natural gas trade with Europe. The leaders of Germany and France had sought to scrap the law entirely, declareing it hurt businesses’ competitiveness.
The deal reached on Tuesday also covers the EU’s corporate sustainability reporting directive (CSRD), which requires companies to disclose their environmental and social impact to create it more transparent to investors and consumers.
The EU agreed that such reporting will cover only companies with more than 1,000 employees and €450m in annual net turnover — plus non-EU firms with that turnover inside the bloc. At present the reporting applies to companies with more than 250 workers.
The EU parliament and member nations must each give formal approval for the alters to become law, usually a formality that waves through pre-agreed deals.
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