The European Parliament has voted to significantly dilute the European Union’s flagship corporate sustainability laws, approving major rollbacks to both the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) after months of political pressure and industry pushback. The vote marks one of the sharpest retreats yet from the bloc’s earlier ambition to lead on global ESG regulation.

Under the revised thresholds, the CSRD would now apply only to companies with more than 1,750 employees and €450 million in revenue, dramatically shrinking its coverage compared to the original scope [1]. The CSDDD would apply only to very large enterprises, those with over 5,000 employees and €1.5 billion in net revenue, effectively removing the majority of EU firms from due diligence obligations tied to environmental and human rights risks [1][2].

Parliamentarians also voted to remove the requirement for companies to publish Paris-aligned transition plans, a move widely criticized by environmental groups. WWF said lawmakers had “turned their back on climate and nature,” reducing once-promising requirements into “performative exercises” with little real impact [1].

The changes come amid the EU’s ongoing “simplification” agenda, initiated in February, which sought to cut reporting burdens. Even before this vote, policymakers had already approved delays, pushing the next wave of CSRD and CSDDD compliance to 2028 [1].

Industry groups welcomed the shift, arguing the EU is restoring competitiveness. MEP Jörgen Warborn said the vote shows “Europe can be both sustainable and competitive,” framing the revisions as necessary relief for businesses facing rising administrative costs [1]. But experts warn that the rollback moves Europe far from its earlier leadership position. KPMG noted the CSRD’s new thresholds now cover just 5% of the originally intended companies [1].

Negotiations with the European Council begin on November 18, with a goal of finalizing the weakened framework by year-end [1].

References

[1] ESG Dive – EU Parliament votes to weaken corporate sustainability laws:
https://www.esgdive.com/news/eu-parliament-votes-to-weaken-corporate-sustainability-laws-csrd-csddd/805574/

[2] Impakter – Europe Retreats: Lawmakers Slash Corporate Climate Obligations:
https://impakter.com/esg-news-europe-retreats-lawmakers-slash-corporate-climate-obligations/