EU Votes to Scale Back Corporate Sustainability Rules

Businesses and officials in the United States, Qatar, France, and Germany have been urging the EU to relax the rules.

Members of the European Parliament take part in a voting session during a plenary session at the European Parliament in Strasbourg, France, on March 12, 2025. Frederick Florin/AFP via Getty Images

European lawmakers on Nov. 13 voted to scale back corporate sustainability and due diligence requirements to ease reporting burdens for companies operating in the European Union.

The EU’s corporate sustainability due diligence directive (CSDDD) requires companies to address human rights and environmental issues in their supply chains, or face fines equivalent to 5 percent of their global turnover.

Currently, CSDDD’s thresholds for due diligence compliance are 1,000 or more employees and more than 450 million euros ($518 million) in turnover. The due diligence rules had already been delayed by a year to July 2027.

In the Nov. 13 vote, the European Parliament determined that only businesses with at least 5,000 workers and a turnover of at least 1.5 billion euros ($1.75 billion) should comply with the due diligence requirements.

Only companies with more than 1,750 employees and an annual net turnover of more than 450 million euros will need to carry out social and environmental reporting. The European Parliament said that within this narrower group, firms will continue reporting under the EU’s taxonomy for sustainable investments.

Businesses and officials in the United States, Qatar, France, and Germany have been urging the EU to relax the rules.

“Today’s 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,” said Jorgen Warborn, the European Parliament member appointed to steer the legislation through the Legal Affairs Committee.

Lawmakers approved the stance with 382 votes in favor, 249 against, and 13 abstentions, setting up negotiations with EU governments later this month.

International Pushback on EU Rules

The overhaul follows months of pushback from global energy producers and industrial groups concerned about the reach of EU legislation.

In October, U.S. Energy Secretary Chris Wright and Qatari Energy Minister Saad al-Kaabi cautioned that the CSDDD could jeopardize cooperation at a time when Europe is trying to reinforce its energy security.

Earlier this month, Kaabi, who heads QatarEnergy, went further during the Abu Dhabi International Petroleum Exhibition and Conference on Nov. 3, saying Qatar will halt LNG supplies to Europe if the directive proceeds unchanged.

ExxonMobil CEO Darren Woods warned on Nov. 3 that the directive risked making operations in Europe unviable.

Speaking to Reuters at the Abu Dhabi International Petroleum Exhibition and Conference, Woods said the measure could have “disastrous consequences” for global business.

He argued that the framework’s obligations would force the company to apply EU climate mandates across its global operations.

In May, the leaders of France and Germany urged the EU to scrap the proposed law.

French President Emmanuel Macron said on May 19 that the directive should be “taken off the table,” and German Chancellor Friedrich Merz made a similar appeal during his first visit to Brussels, saying the law would further burden Europe’s struggling industrial sector.

EU member states have already agreed on their own position, clearing the way for negotiations between the European Parliament and national governments beginning on Nov. 18. Officials aim to finalize the legislation by the end of 2025.

Reuters contributed to this report.