European Union lawmakers voted on 3 April to delay key sustainability reporting requirements, granting businesses additional time to comply with new regulations. The decision, part of a broader effort to revise corporate accountability laws, postpones reporting obligations for most companies until 2027 and supply chain due diligence requirements until 2028.
The move comes in response to industry concerns that stringent EU regulations could weaken European competitiveness against rivals in the United States and China.
Regulatory Shift to Address Industry Concerns
The delay is a response to the European Commission’s “Simplification Omnibus” proposal, introduced in February, which aimed to reduce regulatory burdens on businesses.
European industry leaders have argued that existing sustainability reporting rules place them at a disadvantage, particularly in light of deregulatory policies in the United States under former President Donald Trump, who rolled back regulations and imposed tariffs on foreign goods.
The EU Parliament approved a two-year postponement for most firms in an effort to avoid enforcement of current rules while broader revisions are negotiated. This means that companies with fewer than 500 employees, as well as larger businesses that are not classified as “public interest entities,” will not need to report their sustainability impact until 2027, with their first reports due in 2028. However, larger firms are still expected to comply with the regulations starting this year.
Additionally, the Parliament decided to push back the implementation of the EU’s supply chain law by one year, setting the new enforcement date for 2028.
Further Negotiations and Legal Amendments Ahead
While the delays have been approved, the broader revisions to sustainability reporting laws still require further negotiations between the European Parliament and member states—a process that is expected to take more than a year. One of the most significant proposed changes would drastically reduce the number of companies subject to the reporting requirements.
Under the new proposal, only firms with more than 1,000 employees would need to comply, effectively exempting 80% of the companies initially covered.
Another proposed amendment seeks to modify the due diligence law. Instead of requiring companies to assess their supply chains for environmental and human rights risks annually, businesses would only be obligated to conduct assessments once every five years.
Support from Industry, Criticism from Investors and Lawmakers
The decision to delay the regulations has been welcomed by business groups, who argue that it prevents European companies from facing competitive disadvantages. However, the move has faced strong criticism from investors, left-leaning lawmakers, and campaigners who argue that it weakens corporate accountability and creates uncertainty in EU regulatory policies.
Critics also warn that making rapid changes to recently agreed-upon laws could lead to instability. They argue that weakening sustainability reporting requirements may undermine the EU’s broader goals of improving corporate transparency and environmental responsibility.
Conclusion
Although the EU Parliament has approved the delays, a final formal vote is still required. EU countries have already agreed to the postponements, making the vote largely procedural and expected to pass. Once finalised, negotiations on the broader legal changes will begin, shaping the future of corporate sustainability policies within the EU.
The outcome of these negotiations will have significant implications for businesses operating in the EU, as well as for the bloc’s environmental and human rights commitments. With a potential rollback of key requirements, the balance between corporate interests and regulatory accountability remains a contentious issue in European policymaking.