Companies with more than 1,000 employees and annual turnover exceeding €450 million will be required to publish a sustainability report. Only large companies with more than 5,000 employees and annual turnover exceeding €1.5 billion are required to exercise due diligence with regard to their negative impacts.
Negotiators from the European Parliament and Member States have reached a provisional agreement to update rules on sustainability reporting and corporate due diligence.
On Tuesday, members of the legal affairs committee and the Council agreed to reduce sustainability reporting and due diligence requirements for companies, a proposal that is part of the so-called package of measures. Omnibus I.
Simplified sustainability reports
According to the informal agreement, the obligations of social and environmental reports will only apply to EU companies with an average of more than 1,000 employees and an annual net turnover exceeding €450 million. The net turnover threshold has also been raised for non-European companies to €450 million generated in the EU for sustainability reporting.
The co-legislators also agreed to further simplify reporting requirements, which should become more quantitative, while sectoral reporting would become voluntary. They ensured that smaller companies with fewer than 1,000 employees would be protected from a transfer of reporting responsibility, with the revised rules allowing them to refuse to provide information beyond voluntary standards.
MEPs ensured that the Commission would set up a digital portal for businesses, providing access to templates and guidelines on European and national reporting requirements.
Duty of care only for large companies
According to the agreement, only large EU companies with more than 5,000 employees and an annual net turnover exceeding €1.5 billion will be subject to a duty of care in order to minimise their negative impact on people and the planet. The rules will also apply to non-European companies whose turnover in the EU exceeds the same threshold. Companies must adopt a risk-based approach in their supply chain and refrain from requesting unnecessary information from companies that are not covered by the scope of application.
Companies falling within the scope of the revised due diligence rules will no longer be required to develop a transition plan to make their business model compatible with the'Paris Agreement. They will remain liable at national rather than EU level in the event of non-compliance and could face fines of up to 3.1% of the company's global net turnover, the details of which will be specified by the Commission and Member States.
The rapporteur Jörgen Warborn (EPP, SE) stated:
"We have achieved a very good compromise. We are simplifying sustainability rules, delivering historic cost reductions for businesses, while meeting the expectations of European citizens. This is a victory for competitiveness and a victory for Europe.".
Next steps
The Legal Affairs Committee will vote on the provisional agreement on 11 December 2025. The Parliament as a whole will vote during the December plenary session in Strasbourg.
Featured press conference will take place on Tuesday, 9 December at 10:30 a.m. You can view the recording here.
Background
Following the postponement of the application of obligations relating to sustainability reporting and due diligence, The current proposal aims to reduce the administrative burden on businesses. The updated rules are part of the simplification package known as Omnibus I, proposed by the European Commission on 26 February 2025.