Europe’s climate rulebook just lost several chapters. Lawmakers voted to strip most companies of strict reporting duties on carbon, chemicals and workers’ rights, arguing that the paperwork was choking growth. Only corporate giants will now face full scrutiny.
The Europan Union once flaunted the world’s toughest green rulebook. Today it trims, postpones and exempts. The European Parliament’s Legal Affairs Committee (JURI) vote on 13 October carved great chunks out of the corporate-sustainability regime endorsed only three years ago. The new plan spares most firms the trouble of counting carbon, tracing suppliers or publishing social metrics.
“Today’s vote confirms our support for simplification,” said MEP Jörgen Warborn (EPP/SWE), who steered the text through Parliament as rapporteur. His committee wants mandatory sustainability reporting to cover only companies with more than 1,000 employees and €450m in turnover. The original directive caught firms eight times smaller. Where 50k businesses once faced new paperwork, barely one in ten will remain within scope.
MEPs also slashed due-diligence duties. Only giants with over 5,000 staff and €1.5bn in sales must now check that suppliers respect human rights and refrain from poisoning rivers. Weaker firms escape, and even multinationals may ask partners for data only when a “plausible prospect” of abuse appears. Victims may still sue, but only in national courts.
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Shrinking the ledger
The shift crowns a year of retreat. In July the Commission diluted the EU taxonomy—the label that defines a “sustainable” activity—after firms moaned about cost. The delegated act, due to apply from 2026, pares back indicators and lets companies delay compliance for a year. Brussels insists the framework’s “core objectives” survive, yet every revision bends towards fewer forms and looser timelines.
The latest package goes further. Sector-specific templates become voluntary. Numeric targets replace narrative essays. A free digital portal will guide managers through what is left. Data must be filed once and reused many times, says the Commission, a promise that echoes past simplification drives but now comes with legal force.
Punishment also softens. The ceiling for fines stays at five per cent of global turnover, yet Brussels abandons the idea of an EU-wide liability regime. Member states will choose how, or whether, to chase offenders. The Commission will offer guidance; capitals may ignore it.
Predictability over purity
“We are delivering predictability for European companies,” Mr Warborn said. MEPs fear that crowded dockets and anaemic growth blunt the bloc’s competitiveness. The Parliament had already fast-tracked a delay for some rules in April, citing the need to “unlock additional investment capacity”. Now it aims to finish talks with governments by 24 October and push the wider omnibus through before Christmas.
Business lobbies applaud. Reporting costs, they say, would have sunk especially heavy on suppliers just above the old threshold. Cutting the scope shields small exporters from questionnaires issued by global brands. MEPs even ban large firms from offloading obligations onto exempt partners.
The package cuts costs, strengthens competitiveness, and keeps Europe’s green transition on track. — MEP Jörgen Warborn (EPP/SWE)
Green advocates despair. Voluntary disclosure, they argue, invites greenwashing and leaves investors blind. They note that the Corporate Sustainability Reporting Directive, adopted in 2022, aimed to fix the “insufficient and unreliable” data then available. That goal, they warn, grows distant once again.
Holding the line (just)
Mr Warborn sought to calm such fears. “With a report that cuts costs, strengthens competitiveness, and keeps Europe’s green transition on track,” the Swedish Christian Democrat said, the package balances commercial and climate goals.
Supporters highlight one concession: every large company, even a slimmed-down one, must still draft a transition plan aligned with the Paris accord. Yet no authority will judge whether the plan is credible or enforce it when profits wobble.
Officials insist Europe still leads on disclosure. But ambition once measured by breadth now advertises restraint. Simplification stands atop the to-do list of both Parliament and Commission. Economic ministers echo the refrain. The greening of finance continues, they say, only at a pace industry can afford.
Lighter and cheaper
The Council is likely to back the cut-down scheme, having pushed for narrower rules from the outset. If so, the final directive could pass early next year. The integrated single market will then contain a sustainability regime fragmented by size, sector and nationality—lighter, cheaper and, critics fear, hollower.
Europe’s regulators once claimed they would end greenwashing and make finance sustainable. They now promise not to drown entrepreneurs in spreadsheets. Climate goals survive on paper. The burden of meeting them shifts quietly back to politics, technology and time.