Review of sustainability reporting: the European Parliament eases companies’ obligations
The European Parliament has voted in favour of a significant overhaul of the EU’s sustainability reporting and due diligence framework, endorsing a series of measures that substantially reduce obligations for companies while aiming to keep the overall objectives of transparency and responsible business conduct intact. The vote, held on 6 November 2025, gives Parliament its official negotiating position on the Commission’s proposed simplification package.
A new CSRD framework limited to very large companies
At the heart of the reform is a major adjustment to the Corporate Sustainability Reporting Directive (CSRD). Under the new approach endorsed by MEPs, only the very largest companies, i.e those with more than 1,750 employees and a net turnover above €450 million would be required to continue full sustainability reporting. Sector-specific disclosure standards, which were originally intended to offer more tailored information, would become voluntary. Parliament also emphasised that large companies should not impose additional reporting demands on smaller suppliers beyond what is explicitly required by the simplified standards.
The changes to the Corporate Sustainability Due Diligence Directive (CS3D) are equally far-reaching. Parliament supports narrowing the scope of mandatory due diligence to only the largest corporations, defined as firms with over 5,000 employees and annual turnover exceeding €1.5 billion. These companies would apply a risk-based approach, relying primarily on existing information and only requesting additional data from smaller business partners when strictly necessary. Notably, MEPs voted to remove the requirement for companies to develop a climate transition plan aligned with the Paris Agreement, arguing that this obligation created unnecessary administrative burden without sufficient added value.
While administrative obligations are set to be reduced, liability provisions remain firm. Companies that fail to meet due diligence requirements would still be required to provide full compensation to victims, although the enforcement and sanctions regime would be handled at national rather than EU level.
Parliament also called for the establishment of a digital portal, freely accessible to businesses, where they would find templates, guidance, and consolidated EU requirements on sustainability reporting. The aim is to simplify compliance further and support companies—especially SMEs—in navigating a complex regulatory landscape.
This vote is part of a broader attempt by EU institutions to streamline legislation and ease the regulatory load on businesses as part of the Omnibus I simplification package. For many companies, particularly those below the revised thresholds, the changes could bring substantial relief. For Europe’s largest corporations, the shift to a risk-based model and the removal of mandatory transition plans is expected to lower compliance costs .
Negotiations between Parliament and the Council are expected to begin soon with both institutions aiming to reach a final agreement by the end of the year.
Review of sustainability reporting: the European Parliament eases companies’ obligations
The European Parliament has voted in favour of a significant overhaul of the EU’s sustainability reporting and due diligence framework, endorsing a series of measures that substantially reduce obligations for companies while aiming to keep the overall objectives of transparency and responsible business conduct intact. The vote, held on 6 November 2025, gives Parliament its official negotiating position on the Commission’s proposed simplification package.
A new CSRD framework limited to very large companies
At the heart of the reform is a major adjustment to the Corporate Sustainability Reporting Directive (CSRD). Under the new approach endorsed by MEPs, only the very largest companies, i.e those with more than 1,750 employees and a net turnover above €450 million would be required to continue full sustainability reporting. Sector-specific disclosure standards, which were originally intended to offer more tailored information, would become voluntary. Parliament also emphasised that large companies should not impose additional reporting demands on smaller suppliers beyond what is explicitly required by the simplified standards.
The changes to the Corporate Sustainability Due Diligence Directive (CS3D) are equally far-reaching. Parliament supports narrowing the scope of mandatory due diligence to only the largest corporations, defined as firms with over 5,000 employees and annual turnover exceeding €1.5 billion. These companies would apply a risk-based approach, relying primarily on existing information and only requesting additional data from smaller business partners when strictly necessary. Notably, MEPs voted to remove the requirement for companies to develop a climate transition plan aligned with the Paris Agreement, arguing that this obligation created unnecessary administrative burden without sufficient added value.
While administrative obligations are set to be reduced, liability provisions remain firm. Companies that fail to meet due diligence requirements would still be required to provide full compensation to victims, although the enforcement and sanctions regime would be handled at national rather than EU level.
Parliament also called for the establishment of a digital portal, freely accessible to businesses, where they would find templates, guidance, and consolidated EU requirements on sustainability reporting. The aim is to simplify compliance further and support companies—especially SMEs—in navigating a complex regulatory landscape.
This vote is part of a broader attempt by EU institutions to streamline legislation and ease the regulatory load on businesses as part of the Omnibus I simplification package. For many companies, particularly those below the revised thresholds, the changes could bring substantial relief. For Europe’s largest corporations, the shift to a risk-based model and the removal of mandatory transition plans is expected to lower compliance costs .
Negotiations between Parliament and the Council are expected to begin soon with both institutions aiming to reach a final agreement by the end of the year.
