The European Union has voted to dramatically scale back rules requiring companies to report on their social and environmental impacts, a decision slammed by campaigners as a profound betrayal of communities affected by corporate abuse.
Key Provisions Gutted in Parliament Vote
In a move greenlit by EU lawmakers on Tuesday, the bloc's sustainability reporting and corporate due diligence framework has been significantly weakened. The revised rules will now apply to far fewer companies, stripping away key provisions designed to protect human and ecological rights.
Social and environmental reporting will now only be mandatory for firms with over 1,000 employees and a net annual turnover of at least €450 million. Meanwhile, the more stringent due diligence obligations—requiring companies to identify, prevent, and mitigate their negative impacts—will be restricted to corporations with more than 5,000 employees and a turnover exceeding €1.5 billion. The implementation of this latter requirement has been pushed back to 2029.
The vote, which rubber-stamped changes negotiated in recent weeks, also removed critical "transition plans" from the due diligence rules. These plans would have compelled companies to demonstrate how their business models align with the shift to a sustainable economy.
Backlash Against a 'Troubling' Political Alliance
The final text passed with 428 votes in favour and 218 against. The outcome followed an alliance between the centre-right European People's Party (EPP) and far-right groups to water down the legislation. Green organisations and human rights campaigners have expressed deep alarm at this political manoeuvring and cited intense lobbying pressure from foreign actors like the US and Qatar, who opposed the rules.
"Today's vote is a betrayal of people and communities suffering from corporate abuse around the world," stated Nele Meyer, director of the European Coalition for Corporate Justice. She criticised the influence of "foreign pressure" on a file that should have been guided by evidence and the needs of impacted communities.
Mariana Ferreira, a sustainable finance campaigner at WWF's European office, said the result reflects "a troubling trend" in the EU parliament. "The conservative bloc has increasingly aligned with far-right agendas, legitimising polarising demands and pushing aside science-based evidence and warnings," she added.
Simplification Drive or Deregulation?
Jörgen Warborn, the Swedish MEP from the EPP who led the file, defended the vote as "an important first step" in simplifying EU rules. "Parliament has listened to the concerns expressed by job creators across Europe," he claimed. "Backed by a broad majority, today’s vote delivers historic cost reductions while keeping Europe’s sustainability goals on track."
This rollback forms part of a wider push by the European Commission to cut green regulations under the banner of boosting the EU's competitiveness. The corporate rule cuts are the first in a series of "omnibus" proposals aimed at simplifying existing laws—a process critics equate with outright deregulation.
The controversy is further fuelled by allegations of undue influence. Research group Somo recently revealed that an alliance of 11 companies, including major US oil firms, worked with the PR firm Teneo to strip the rules of their key provisions. Furthermore, Warborn himself faced a formal complaint on Monday from Transparency International and other nonprofits, alleging a conflict of interest due to his role as president of the lobby group SME Europe. Warborn rejected the allegations as "false" and "politically motivated."
The European Ombudsman had already found procedural shortcomings in the Commission's preparation of the omnibus proposals, which "taken together, amount to maladministration."
