EU Parliament Backs Major Simplification of Sustainability Reporting and Due Diligence
- Olivia J Mathai
- Nov 17
- 3 min read
Updated: Nov 23
By: Olivia M
The European Parliament has voted to adopt a significantly scaled-back approach to corporate sustainability reporting and due diligence requirements across the EU. This move, passed with 382 votes in favor, is aimed at reducing the administrative burden on businesses, with a focus on making the rules lighter and applicable only to the largest corporations.
Key Changes to Sustainability Reporting
MEPs are pushing for a substantial reduction in the number of companies subject to environmental and social reporting, with new thresholds proposed:
CSRD Scope Narrowed: Only companies with an average of over 1,750 employees and a net annual turnover exceeding €450 million would be required to conduct social and environmental reporting.
Taxonomy Link: This smaller group of large businesses would also be the only ones required to provide sustainability reporting under the EU Taxonomy (the classification system for sustainable investments).
Simplified Standards: Reporting standards themselves would be simplified, requiring fewer qualitative details. Sector-specific reporting would become voluntary.
SME Protection: Smaller companies (SMEs) would be explicitly shielded from excessive demands, with large partners barred from requesting more information than what is set out in voluntary standards.
Due Diligence Limited to Very Large Corporations
Similar to reporting, the due diligence obligations—which require companies to monitor and address negative impacts on people and the planet—will be drastically limited:
Higher Thresholds: Due diligence requirements would apply only to very large corporations with more than 5,000 employees and a net annual turnover over €1.5 billion.
Risk-Based Approach: These massive firms would use a risk-based approach to identifying negative impacts, rather than systematically monitoring all their partners. They are expected to rely on already available information and use requests for additional data from smaller partners only as a last resort.
Transition Plan Removal: Significantly, businesses would no longer be required to prepare a transition plan to align their model with the Paris Agreement.
Enforcement: Offending firms could face fines and would be liable for fully compensating victims for damages, with enforcement and liability handled at the national rather than the EU level.
Digital Portal and Next Steps
To further simplify the process, MEPs want the European Commission to create a new digital portal. This portal would offer businesses free access to templates, guidelines, and clear information on all EU reporting requirements, complementing the European Single Access Point.
The vote officially adopts Parliament's negotiating position on this simplification package, which is part of the "Omnibus I" proposals. These proposals include, notably, a narrowed scope for the Corporate Sustainability Reporting Directive (CSRD). Negotiations with EU governments are set to begin on November 18, aiming to finalize the updated legislation by the end of 2025.
How DT Master Carbon Can Help
While these changes aim to reduce administrative burdens by narrowing the scope, they emphasize that the largest, highest-impact corporations still face stringent requirements for materiality assessments and risk-based due diligence concerning environmental and social factors. For the very large companies still within the scope of these rules, meeting the simplified but mandatory requirements requires accurate, defensible, and standardized environmental data.
DT Master Carbon (DTMC) specializes in providing robust sustainability management and data solutions that directly address this need. By utilizing DTMC's expertise, in-scope companies can establish the high-quality, auditable emissions data, transition risk metrics, and streamlined reporting necessary to satisfy EU standards, ensuring that their risk-based approach to due diligence is based on verifiable environmental impact data and thus avoiding national-level fines and litigation for non-compliance.
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