EU corporate sustainability laws suffer another blow from lawmakers

European lawmakers have this week adopted a proposal to amend the Commission’s controversial “Omnibus” plan that would further weaken and limit the scope of EU corporate sustainability reporting laws, according to critics.

The EU Commission in February submitted to the parliament a so-called “Omnibus” package of directives (sometimes referred to as the Sustainability Omnibus) that aimed to simplify rules that require companies to disclose their impact on society and the planet, in a drive to improve the bloc’s competitiveness. 

But the initial package came under fire from proponents of corporate sustainability as it planned to substantially reduce the number of businesses required to report on their social and environmental impact, soften reporting requirements and delay the implementation of new rules.

• Read more: Campaigners' fury at attempt to 'eviscerate' EU sustainability laws

Campaigners in February called on the EU parliament to reject the Commission’s proposal. But following tense negotiations between the different political groupings of the EU legislature, this week the members of the Legal Affairs Committee, which represents parliament throughout the legislative process of the Omnibus package, voted to support a proposal to further weaken corporate sustainability laws. 

In particular, the committee voted to further narrow the scope of companies covered by the law, remove requirements for systematic assessment of supply chains’ harmful impacts, and maintain the scrapping of an EU-wide civil liability provision to hold companies accountable.

The committee’s make-up mirrors party political forces in Parliament, meaning any agreement between members of the committee is intended to reflect the broader assembly’s position.

Simplification or dilution?

Jörgen Warborn (pictured top), rapporteur on simplified sustainability reporting and due diligence requirements, who led the negotiations of the committee, said the vote reflected “a big support for simplification”, which was needed to make the EU appealing to businesses and investors. 

He argued that to continue driving a net-zero agenda, Europe needed to “use the carrot more than the stick”. He said: “If we use the stick, then [companies] will leave to other places and invest in other parts of the world.”

Everything is being watered down, and few in power are truly standing up to stop it

However, campaigners lashed out at the committee’s final proposal. Richard Gardiner, interim head of EU policy at ShareAction, a charity promoting responsible investment, said that despite some small elements of the initial laws remaining, “everything is being watered down, and few in power are truly standing up to stop it. We are deeply concerned about the political direction and what it means for enforcement and uptake by companies”. 

He added: “Time is running out and this constant back-and-forth is holding back Europe from delivering on its sustainability commitments.”

A protest in Brussels, Belgium, against the Omnibus package, organised by Friends of the Earth Europe, the European Trade Union Confederation and the European Coalition for Corporate Justice in February. Credit: Philip Reynaers. 
 

Mariana Ferreira, sustainability policy officer at the WWF European Policy Office, said: “The EU cannot afford to continue diluting its climate and nature commitments when faced with mounting ecological and social crises, which in turn are increasingly damaging European livelihoods, economy and cohesion.”

This comes in a context where concerns are rising that the EU is moving away from its broader “Green Deal” agenda (a series of policy measures aiming to make the bloc carbon neutral by 2050) as the political balance of elected lawmakers shifted to the right in the 2024 European elections. 

In June, a flagship anti-greenwashing law was withdrawn days before the final negotiations were due to take place, following pressure from right wing and far-right political parties on the Commission. 

• Read more: EU anti-greenwashing law torpedoed after Commission’s shock U-turn

In the EU legislative process, the Commission’s role is to propose legislation, which needs approval from both the Council (of relevant ministers for the 27 countries) and parliament to be adopted, often after several amendments are made, before the parliament approves it in a final vote.

What are the laws concerned in the latest vote?

This week’s vote focused on one aspect of the Commission’s Omnibus plan: a directive to amend two sustainability reporting laws, the Corporate Sustainability Reporting Directive (CSRD) (which requires companies to report on their own social and environmental impacts) and the Corporate Sustainability Due Diligence Directive (which mandates businesses to assess, and take action against, harmful impacts in their supply chains).

In April the European parliament passed a separate law to postpone the implementation of both CSRD and CSDDD, which was not included in the committee’s latest negotiations. 

What are key points adopted by the parliamentary committee?

1. Scope

The committee’s agreement further reduces the scope of companies covered by the law. For the CSDDD, only businesses with more than 5,000 employees and €1.5bn turnover will be required to report; and only companies with at least 1,000 employees and €450m turnover will be concerned with CSRD.

The Commission’s February proposal was to only include companies with more than 1,000 employees and a €50m turnover or a balance sheet exceeding €25m – this already represented an 80% drop on the number of companies covered compared with original laws.

2. Risk-based reporting

CSDDD originally required businesses to systematically conduct in-depth assessments of adverse impacts throughout their supply chains. The Commission’s February Omnibus proposal planned to request companies to only systematically assess and report on the impact of “tier 1” partners – direct suppliers to the company. 

The committee’s plan scraps entirely the requirement for systematic reporting, instead taking a risk-based approach where companies only investigate areas where they think there is a risk of negative impacts, or where there is plausible information that there is a risk.

3. Transition plans

While companies are still required to adopt a climate transition plan, they no longer need to abide by legally-binding “implementation actions” that would commit them to take certain steps at a certain point in time.

4. Civil liability

The committee voted to maintain the Commission’s proposal to scrap plans for a harmonised EU “civil liability” framework.

The CSDDD originally introduced an EU-wide provision to hold companies legally accountable for their negative impacts on human rights and the environment. Instead, the Commission’s Omnibus plan suggested scrapping this harmonised civil liability and instead relying on country-specific laws.

This would make it harder for victims to pursue companies causing harm, campaigners argue – as they would have to navigate 27 different legal systems with some more or less favourable to their cause – and as a result weaken the enforcement of the directive. 

Risk of total dismantling

The agreement passed with 17 votes in favour, six votes against and two abstentions – securing support from centre-left to centre-right parties, following tense negotiations that included centre-right parties threatening to vote with the far-right on an agreement that would have diluted the two sustainability directives even further.

René Repasi (pictured), committee coordinator for the centre-left grouping Socialists & Democrats (S&D), said: “At today’s meeting of the legal affairs committee, we voted in favour of the platform agreement on the Sustainability Omnibus. 

“Our group has been at the forefront of the adoption of the CSDDD, thanks to the tireless efforts and commitment of members of our group and civil society. The aim has always been to establish clear obligations for those responsible for harm, and ensure accountability for those that profit from it. 

“Today’s decision was therefore a particularly difficult one, but it reflects our commitment to fairer supply chains, as it is our responsibility to prevent the total dismantling of the law through open cooperation with the far right.”

Kira Marie Peter-Hansen (pictured), MEP of the Greens, which opposed the committee’s proposal, said: “By removing civil liability and weakening climate transition plans, this deal undermines both accountability and green ambition. Europe deserves sustainability rules that protect people and the planet, not watered-down deals that serve short-term corporate interests.”

What’s next?

As the committee has now agreed its proposal on behalf of parliament, the law will now enter inter-institutional discussions (known as “trilogue”) to reach a final agreement between parliament, the Council of national ministers representing each country, and the Commission, with a final result expected by the end of this year. 

Top image: Jörgen Warborn speaks at a press conference on simplified sustainability reporting and due diligence requirements on Monday. © European Union 2025 - Source : EP

Photographs of René Repasi and Kira Marie Peter-Hansen © European Union 2025 - Source : EP.