Published by Global Banking & Finance Review®
Posted on October 8, 2025
3 min readLast updated: January 21, 2026
Add as preferred source on GoogleThe EU Parliament plans to reduce the corporate sustainability law, affecting companies with 5,000+ employees, to simplify compliance.
By Kate Abnett
BRUSSELS (Reuters) -Lawmaker groups holding a majority in the European Parliament agreed a deal late on Wednesday to make deeper cuts to the EU's corporate sustainability law, lawmakers and officials told Reuters.
The European Union's corporate sustainability due diligence directive (CSDDD) was adopted last year and requires companies to fix human rights and environmental issues within their supply chains, or face fines of 5% of global turnover.
It has become one of the most politically contested parts of Europe's green agenda, and Brussels is now negotiating changes to simplify the rules for European companies, after pushback from Germany and France - as well as the United States and Qatar, and companies including Exxon Mobil.
The centre-right European People's Party group - the biggest lawmaker group in the European Parliament - on Wednesday struck a deal with socialist and liberal lawmakers to pare back the law further, Jorgen Warborn, the EPP lawmaker leading the negotiations, told Reuters.
A key change would be to only apply the rules to companies with 5,000 or more employees and at least 1.5 billion euros ($1.74 billion) in turnover, he said. Currently, CSDDD covers companies with 1,000 or more employees and above 450 million euros in turnover.
"I'm focusing on making sure that we put Europe back to growth, so that we can produce more jobs and more long-term prosperity," Warborn said.
Brussels has argued changes are needed to avoid overburdening companies with complex reporting requirements before the law is scheduled to apply in 2027. But campaigners and some companies have warned the EU risks gutting corporate accountability.
Socialist lawmakers had initially balked at the plans, but on Wednesday said they had agreed after the EPP threatened to strike a deal with far-right lawmakers instead, and weaken the law further.
"This compromise is not our preferred option but the alternative was a worse EPP agreement with the far right," a spokesperson for the Socialists and Democrats group said.
Dutch Socialist lawmaker Lara Wolters said she had resigned as the group's negotiator on Wednesday in response.
An official from the liberal Renew group confirmed it had also backed the deal. Together, the three lawmaker groups hold a majority of seats in the EU Parliament.
The EU Parliament will vote on the deal later this month, before negotiating the final changes to the law with EU countries.
($1 = 0.8601 euros)
(Reporting by Kate Abnett; Editing by Lincoln Feast.)
Corporate sustainability refers to a company's commitment to conducting business in an environmentally and socially responsible manner, ensuring long-term economic viability while minimizing negative impacts on society and the environment.
A corporate sustainability due diligence directive is a regulatory framework that requires companies to identify, prevent, and mitigate adverse impacts on human rights and the environment within their supply chains.
Fines for non-compliance with sustainability laws can vary, but under the EU's directive, companies may face penalties of up to 5% of their global turnover if they fail to adhere to the regulations.
The European Parliament plays a crucial role in shaping sustainability laws by debating, amending, and voting on proposed legislation that impacts corporate governance and environmental accountability.
Corporate governance refers to the systems and processes that direct and control a company, ensuring accountability, fairness, and transparency in its relationships with stakeholders.
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