Published by Global Banking & Finance Review®
Posted on December 9, 2025
3 min readLast updated: January 20, 2026
Add as preferred source on GoogleThe EU has agreed to weaken its corporate sustainability laws, affecting large companies and extending compliance deadlines to 2029.
By Mrinmay Dey and Kate Abnett
Dec 9 (Reuters) - The European Union reached a deal on Tuesday to scale back its corporate sustainability laws, after months of pressure from companies and governments including the United States and Qatar.
The changes agreed by EU governments and the European Parliament would weaken such rules for a large majority of businesses now covered. They follow criticism from some industries that EU red tape and strict regulation hindered competitiveness with foreign rivals.
"This agreement brings historic cost reductions," Parliament negotiator Jorgen Warborn said. He noted that the cuts went further than those initially proposed by the European Commission, which it had estimated would reduce companies' administrative costs by 4.5 billion euros.
The push to weaken the laws had dismayed environmental campaigners, some investors and governments including Spain, which had urged Brussels to maintain the rules to support European priorities on sustainability and human rights.
EXEMPTIONS FOR SMALLER COMPANIES
A spokesperson for U.S. oil and gas major ExxonMobil said the changes "didn’t go nearly far enough", noting that the EU's due diligence law would still apply to foreign companies.
"The Trump administration has made clear this is a non-starter for trade talks and we look forward to a common-sense resolution in the near future," the spokesperson said.
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 annual turnover.
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 law, which requires companies to fix human rights and environmental issues in their supply chains.
The EU also delayed the deadline to comply with CSDDD - which came into force last year - to mid-2029, and dropped a requirement for companies to adopt climate change transition plans.
"This is counter-productive for businesses, weakens accountability, and jeopardises the EU's own plans and objectives on climate and the industrial transition," said Julia Otten, senior policy officer at law firm and advocacy group Frank Bold.
FOREIGN PRESSURE
The United States and Qatar have pressured Brussels to scale back the due diligence law, warning that the rules risked disrupting liquefied natural gas trade with Europe.
The leaders of Germany and France had sought to scrap the law entirely, saying it hurt businesses' competitiveness.
The deal reached on Tuesday also covers the EU's corporate sustainability reporting directive (CSRD), which requires companies to disclose their environmental and social impact to make this more transparent to investors and consumers.
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.
The EU Parliament and EU countries must each give formal approval for the changes to become law, usually a formality that waves through pre-agreed deals.
($1=0.8591 euros)
(Reporting by Mrinmay Dey and Kate Abnett; Editing by Clarence Fernandez, Aidan Lewis)
Corporate sustainability refers to a company's commitment to conducting business in an environmentally and socially responsible manner, balancing economic growth with ecological and social considerations.
Due diligence is the process of investigating and evaluating a business or individual before entering into a contract or agreement, ensuring compliance with laws and regulations.
A corporate governance directive is a set of guidelines or regulations that dictate how a corporation should be directed and controlled, focusing on accountability and transparency.
Sustainability reporting is the practice of disclosing a company's environmental, social, and governance (ESG) performance and impact, aimed at providing transparency to stakeholders.
Environmental campaigners are individuals or groups advocating for the protection of the environment and promoting sustainable practices to combat climate change and ecological degradation.
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