European Union ministers have given final approval to amendments that scale back corporate sustainability obligations, narrowing the reach of the Corporate Sustainability Due Diligence Directive (CSDDD).
The decision was taken at a meeting in Brussels following negotiations between EU governments and the European Parliament.
The revised rules now apply only to EU companies with more than 5,000 employees and €1.5 billion in annual turnover. Foreign firms must meet the same €1.5 billion turnover threshold within the EU to fall under the regime. Companies that breach the rules can still face fines of up to 3% of global net turnover.
The compliance deadline has been extended to mid-2029 from mid-2027, and the requirement for firms to adopt climate transition plans has been removed.
Changes also affect the Corporate Sustainability Reporting Directive (CSRD). Reporting requirements will now apply only to companies with more than 1,000 employees and €450 million in annual net turnover, compared with the previous 250-employee threshold. The move significantly reduces the number of companies required to disclose environmental and social impacts.
“We are reducing unnecessary and disproportionate burdens on our businesses, with simpler, more targeted and more proportionate rules,” Marilena Raouna, Cyprus’s deputy EU affairs minister, said.
The revisions follow criticism from industries that compliance costs were undermining European competitiveness. The United States and Qatar had urged the EU to scale back the directive, warning it could disrupt gas supplies. ExxonMobil argued the changes do not go far enough.
Environmental groups and some investors have criticised the rollback, saying it will make it harder to identify sustainable companies.
The amendments are expected to pass formally into law in the coming weeks, signalling a shift towards more limited, large-company oversight rather than wholesale deregulation.