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EU Lawmakers Back Sweeping Cuts to Sustainability Rules After Member State Pressure

By  |  October 13, 2025
EU economics David S Evans

European Union lawmakers have endorsed significant reductions to two key sustainability directives, bowing to sustained lobbying from the bloc’s largest economies and major industry groups, according to Bloomberg.

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    The European Parliament’s Committee on Legal Affairs voted Monday to narrow the scope of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Per Bloomberg, the CSRD will now only apply to companies with at least 1,000 employees, while the CSDDD will be limited to firms with a workforce of 5,000 or more—far above the original 250-employee threshold envisioned in both frameworks.

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    The committee’s decision follows months of corporate lobbying and pressure from France and Germany, whose business sectors warned the regulations risked undermining competitiveness. According to Bloomberg, the CSDDD, which aims to hold companies accountable for human rights and environmental abuses in their global supply chains, had faced particularly intense opposition.

    Under the revised terms, CSDDD will apply only to companies with 5,000 employees and annual revenues exceeding €1.5 billion. Lawmakers also voted to remove a common civil-liability clause that would have made it easier for affected communities to bring claims against corporations. Firms that fall within the new scope will still need to present transition plans aligning with EU climate objectives and the Paris Agreement.

    Similarly, the CSRD will now cover only firms with more than 1,000 employees and annual revenues of at least €450 million. Financial holdings and listed subsidiaries will be exempt from the reporting rules, according to Reuters.

    The United States has expressed concern over the potential impact of these regulations on American businesses operating in Europe. The U.S. Chamber of Commerce recently warned that the measures represented “unprecedented regulatory overreach.” Meanwhile, discontent has also grown among European corporate leaders. More than three dozen CEOs from France and Germany reportedly urged their governments to abandon the due diligence directive altogether, writing directly to French President Emmanuel Macron and German Chancellor Friedrich Merz. Both leaders have indicated a willingness to revisit the framework.

    Despite the cuts, sustainability advocates have criticized the changes as excessively lenient. “By limiting availability of essential data, the EU will be compromising on its competitive edge,” said Susanna Arus, EU public affairs manager for the advocacy group Frank Bold. She warned that scaling up clean technology and achieving strategic goals in energy efficiency and resource independence would require continued access to robust, transparent data.

    Source: Bloomberg