MEPs Streamline Sustainability Rules

In a significant legislative move, the European Parliament has voted to simplify sustainability reporting and due diligence requirements for businesses, focusing these obligations primarily on larger corporations. This decision, made during a plenary session on November 13, 2025, aims to reduce the bureaucratic burden on companies while still maintaining a commitment to environmental and social accountability.

With a vote count of 382 in favor, 249 against, and 13 abstentions, the Parliament adopted a stance that tailors sustainability reporting to entities with over 1750 employees and a net annual turnover exceeding €450 million. These businesses will also need to comply with taxonomy rules under the new streamlined standards, which are less detailed and more flexible compared to previous requirements. Smaller companies will benefit from reduced reporting demands, potentially easing the operational pressures they face.

The revised due diligence obligations now apply solely to very large corporations, specifically those with over 5,000 employees and a net annual turnover above €1.5 billion. These firms are expected to adopt a risk-based monitoring approach and limit their information requests to smaller business partners unless absolutely necessary. Additionally, these corporations will not be required to prepare a transition plan for alignment with the Paris Agreement, though non-compliance will result in national-level fines and full compensation for any damages caused.

MEP Jörgen Warborn, the rapporteur of the Legal Affairs Committee, commented on the vote, stating, “Today’s vote shows that Europe can be both sustainable and competitive. We are simplifying rules, cutting costs, and giving businesses the clarity they need to grow, invest, and create well-paying jobs.” The next steps involve negotiations with EU governments, with the objective of finalizing the legislation by the end of 2025. The European Commission is also set to establish a digital portal providing free access to all EU reporting requirements, which will support businesses in complying with the new standards.