Finance
EU countries give final approval to weaken company sustainability laws
Published by Global Banking & Finance Review®
Posted on February 24, 2026
3 min readLast updated: February 24, 2026
Quick Summary
EU ministers approved scaled-back sustainability rules: CSDDD now targets only very large firms, CSRD thresholds rise, fines capped at 3%, and compliance pushed to mid‑2029 despite opposition from green groups.
EU Ministers Finalize Scaled-Back Corporate Sustainability Rules
By Kate Abnett
BRUSSELS, Feb 24 (Reuters) - EU countries on Tuesday gave their final approval to scale back rules that require companies to address environmental and human rights risks in their supply chains, after months of pressure from businesses and governments including the U.S and Qatar.
What the EU Changes Mean for Companies
The changes, approved by European Union ministers at a meeting in Brussels, weaken the rules for most businesses currently covered. EU governments and the European Parliament negotiated the amendments last year.
Campaigners' criticism
Competitiveness concerns
Political and Industry Reaction
They follow criticism from some industries that EU red tape and strict regulation hindered competitiveness with foreign rivals. But the weaker laws have dismayed environmental campaigners and some investors who said it would become harder to identify genuinely sustainable companies.
Employee and turnover thresholds
Who Is Now in Scope (CSDDD)
Under the changes, the EU will limit its corporate sustainability due diligence directive (CSDDD) to only the largest EU corporations - those with more than 5,000 employees and 1.5 billion euro ($1.8 billion) annual turnover.
Penalties and Enforcement
Foreign firms covered
The same rules will cover foreign companies whose EU turnover exceeds that amount. They could face fines of up to 3% of net global turnover for breaching the rules.
"We are reducing unnecessary and disproportionate burdens on our businesses, with simpler, more targeted and more proportionate rules," said Marilena Raouna, Cyprus's deputy EU affairs minister, who chaired Tuesday's meeting.
US and Qatar pressure
The U.S. and Qatar had demanded the EU scale back CSDDD, warning that it risked disrupting their gas supplies to Europe. U.S. oil and gas major ExxonMobil has criticised the changes as not going far enough.
Climate transition plans dropped
Deadline moved to 2029
Timeline and Requirements
The EU also delayed the deadline to comply with CSDDD to mid-2029 - versus mid-2027 previously for larger companies - and dropped a requirement for companies to adopt climate change transition plans.
Reporting Rules (CSRD)
The changes also cover the EU's corporate sustainability reporting directive, which requires companies to disclose their environmental and social impact to make this more transparent to investors and consumers.
1,000+ employees, €450m turnover
The EU agreed that such reporting will cover only companies with more than 1,000 employees and 450 million euro annual net turnover - plus non-EU firms with this turnover inside the bloc - versus companies with more than 250 employees now.
Next Steps
The changes will pass into law in the coming weeks.
FX reference: $1 = €0.8488
($1 = 0.8488 euros)
(Reporting by Kate Abnett. Editing by Mark Potter)
Key Takeaways
- •CSDDD scope limited to companies with over 5,000 employees and €1.5bn turnover; non‑EU firms above that EU turnover are included.
- •Breaches can draw penalties of up to 3% of net global turnover.
- •Compliance deadlines shift to mid‑2029 and climate transition plan requirements are dropped.
- •CSRD reporting narrowed to firms with more than 1,000 employees and €450m net turnover, including qualifying non‑EU entities’ EU turnover.
- •Move follows pressure from industry and energy suppliers, including the U.S. and Qatar, drawing criticism from investors and campaigners.
Frequently Asked Questions about EU countries give final approval to weaken company sustainability laws
1What is the main topic?
EU ministers granted final approval to scale back corporate sustainability rules, narrowing the CSDDD’s scope and easing CSRD reporting to reduce compliance burdens.
2Which companies are affected and when?
Due diligence applies to firms with over 5,000 employees and €1.5bn turnover, including non‑EU companies meeting that EU turnover. Reporting under CSRD targets firms with 1,000+ employees and €450m turnover, with most obligations starting mid‑2029.
3What penalties and requirements remain?
Authorities can fine companies up to 3% of net global turnover for non‑compliance. Climate transition plan mandates were removed, but firms still must address key environmental and human‑rights risks in their operations and value chains.
