On Tuesday, Legal Affairs Committee MEPs and the Council agreed to reduce sustainability reporting and due diligence requirements for companies, a proposal that forms part of the so-called Omnibus I package.
Simpler sustainability reporting
According to the informal agreement, social and environmental reporting will only be required for EU companies employing on average over 1,000 employees and with a net annual turnover of over €450 million. The net turnover threshold has also been increased for non-EU companies to €450 million generated in the EU for sustainability reporting.
Co-legislators also agreed on further simplification of the reporting requirements which should become more quantitative, while sector-specific reporting would become voluntary. They ensured smaller companies with under 1,000 employees are protected from shifting responsibility for reporting, as the updated rules allow them to refuse reporting information beyond what is set out in the voluntary standards.
MEPs made sure that the Commission will create a digital portal for businesses with access to templates and guidelines on EU and national reporting requirements.
Due diligence only for large corporations
According to the agreement, only large EU corporations with more than 5,000 employees and a net annual turnover of over €1.5 billion will need to carry out due diligence to minimise their negative impact on people and the planet. The rules will also apply to non-EU corporations with a turnover in the EU above the same threshold. Companies should adopt a risk-based approach in their chain of activities and should refrain from requiring unnecessary information from companies not included in the scope.
Businesses within the scope of the revised due diligence rules will no longer need to prepare a transition plan to make their business model compatible with the Paris Agreement. They will remain liable at national rather than EU level for non-compliance and could face fines of up to 3% of the company’s net worldwide turnover, the guidance on which will be provided by the Commission and member states.
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Rapporteur Jörgen Warborn (EPP, SE) said: “We have secured a very good compromise. We are making the sustainability rules easier to comply with, delivering historic cost reductions for businesses, and still delivering for European citizens. This is a win for competitiveness and a win for Europe.”
Next steps
The Legal Affairs Committee will vote on the provisional agreement on 11 December 2025. Parliament as a whole will vote on it during its plenary session in December in Strasbourg.
A press conference will take place on Tuesday 9 December at 10.30. You can follow it live.
Background
Following the delayed application of the sustainability reporting and due diligence obligations, the current proposal seeks to reduce the administrative burden for companies. The updated rules are part of the Omnibus I simplification package proposed by the European Commission on 26 February 2025.
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