The European Parliament’s Committee on Economic and Monetary Affairs (ECON Committee) is proposing a dramatic scaling back of sustainability reporting and due diligence obligations, in a move that could exempt thousands of companies from the European Union’s ESG regulations.
According to a draft amendments report seen by ESG Today, the proposed changes go well beyond the European Commission’s recent Omnibus package, which had already sought to reduce regulatory burdens.
In February, the European Commission unveiled its Omnibus I package, a sweeping set of reforms designed to lighten the compliance load for EU businesses. Among the proposals was a major change to the Corporate Sustainability Reporting Directive (CSRD), restricting its application to companies with more than 1,000 employees and €50m in turnover. This shift alone would exempt around 80% of currently affected companies. The same 1,000-employee threshold was also proposed for the Corporate Sustainability Due Diligence Directive (CSDDD).
However, the ECON Committee’s draft amendments call for an even higher bar. The revised thresholds would limit CSRD and CSDDD applicability to companies with over 3,000 employees and €450m in annual revenues. The committee stated that the adjustment is in line with the goal of simplifying compliance and easing the administrative load on EU firms.
The proposed amendments also target the depth of ESG disclosures. While the Commission’s Omnibus plan suggested a general reduction in data points under the European Sustainability Reporting Standards (ESRS), the ECON draft seeks to cap these at 100 mandatory and 50 voluntary data points.
In another major shift, the draft eliminates the CSDDD’s requirement for companies to adopt a climate transition plan. The justification, according to the committee, is that the CSRD already mandates such plans, making the CSDDD requirement redundant.
These proposals underscore the growing divide within EU institutions over the future of corporate ESG regulation. Debates held in March revealed widely differing views, with some parliamentarians calling for a complete repeal of the CSRD and CSDDD, while others have voiced concern that the Commission’s own proposals already go too far in weakening oversight.
If adopted, the ECON Committee’s proposals would mark a significant retrenchment in the EU’s sustainability policy agenda, potentially undermining the bloc’s leadership on corporate ESG disclosures.
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