MEPs back changes to EU sustainability reporting, due diligence norms

With 382 votes in favour, 249 against and 13 abstentions, the Parliament adopted its negotiating position on simplified sustainability reporting and due diligence duties for businesses.

Parliament members (MEPs) consider that only businesses employing on an average over 1,750 employees and with a net annual turnover of over €450 million should have to carry out social and environmental reporting. Only businesses within this scope would also be required to provide sustainability reporting under taxonomy rules.

Reporting standards would be further simplified and reduced, requiring fewer qualitative details, and sector-specific reporting would become voluntary.

Smaller companies would be protected from the reporting requirements of their large business partners, which would not be allowed to request more information than what is set out in the voluntary standards.

Due diligence requirements would apply only to large corporations with more than 5,000 employees and a net annual turnover of over €1.5 billion. MEPs want these businesses to adopt a risk-based approach to monitoring and identifying their negative impact on people and the planet.

Instead of systematically requesting information from their smaller business partners, they should rely on information that is already available and could only request additional information from their smaller business partners as a last resort, an official release said.

These companies would no longer need to prepare a transition plan to make their business model compatible with the Paris Agreement and could face fines for not complying with due diligence requirements the guidance on which will be provided by the European Commission and member states.

Offending firms would be liable at the national rather than European Union (EU) level and would have to fully compensate their victims for damages.

MEPs also want the Commission to establish a digital portal for businesses with free access to templates, guidelines and information on all EU reporting requirements complementing the European Single Access Point.

Negotiations with EU governments, which have already adopted their position on the file, will start on November 18, with the aim of finalising the legislation by the end of 2025.

Following the delayed application of the sustainability reporting and due diligence obligations, the current proposal seeks to simplify them and reduce the administrative burden for companies.

The updated rules are part of the Omnibus I simplification package proposed by the European Commission on February 26, 2025.

ALCHEMPro News Desk (DS)