EU Parliament Weakens Corporate Sustainability Rules

The European Parliament has approved a deal to weaken the European Union’s corporate sustainability laws, rolling back key reporting and due-diligence requirements that were originally designed to strengthen environmental and human rights accountability across the bloc.

Under the revised framework, the scope of the rules is narrowed significantly, with higher thresholds limiting mandatory compliance primarily to the EU’s largest companies. Lawmakers supporting the changes argue the original legislation placed disproportionate regulatory burdens on businesses, particularly smaller firms, at a time of economic uncertainty and intensifying global competition.

The vote reflects months of pressure from industry groups and several governments concerned about the impact of sustainability regulations on investment, supply chains, and corporate competitiveness. Environmental organizations and civil society groups have criticized the decision, warning that the rollback risks weakening transparency and slowing progress toward the EU’s climate and sustainability goals.

The legislation now moves to EU member states for final approval, which is widely expected in early 2026. If enacted, the changes would reshape how companies operating in Europe disclose environmental risks, manage supply-chain impacts, and report on sustainability performance.