EU Parliament Votes to Freeze Sustainability Rules

EU Parliament Delays Sustainability Rules for Businesses

By Kate Abnett

BRUSSELS (Reuters) -European Union politicians on Thursday gave themselves more time to negotiate changes to exempt smaller businesses from sustainability reporting rules that European industry says put it a disadvantage.

The European Commission in February proposed legal changes it named the "Simplification Omnibus" that would exempt thousands of smaller European businesses from EU sustainability reporting rules.

It was a response to complaints from EU industry that it cannot compete with rivals in China and the United States, where President Trump is rolling back regulation and imposing tariffs on foreign goods.

The proposal must be negotiated by the European Parliament and member states - a process that can take more than a year. So to avoid already agreed laws applying before those negotiations conclude, the Parliament voted on Thursday to delay by two years the existing reporting rules for most companies.

The means firms with fewer than 500 employees and larger firms that are not deemed "public interest entities" will not need to report on their sustainability impact until the year 2027 - with reports due in 2028. Most bigger firms face the reporting obligations this year.

The Parliament also agreed on Thursday to delay the EU's supply chain law by one year. That policy as a result will not take effect until 2028.

EU countries already agreed to the delays, but must give their final formal approval in the coming weeks. That final vote is a formality that is expected to pass.

The negotiations will then begin on the bigger proposed changes to the laws. They include exempting an estimated 80% of the companies initially covered by the green reporting rules, by only applying them to firms with more than 1,000 employees.

The EU also wants to change its due diligence law so companies have to assess their supply chains for environmental and human rights problems once every five years, rather than every year.

While backed by industry, the drive to simplify has drawn criticism from some investors, left-leaning lawmakers and campaigners, who said the first wave of omnibus proposals would gut corporate accountability and that such swift changes to recently agreed laws created an unstable environment.

(Reporting by Kate Abnett; editing by Barbara Lewis)