The European Parliament’s Legal Affairs Committee has approved revised measures on corporate sustainability reporting and due diligence, narrowing the scope of companies required to comply with the upcoming European Union rules. The committee’s decision saw 17 votes in favor, 6 against, and 2 abstentions.
Under the updated proposals, only companies with more than 1,000 employees and an average net turnover exceeding €450 million will be obligated to follow the sustainability reporting requirements. Companies below this threshold will have the option to report voluntarily using guidance issued by the European Commission.
The revised due diligence obligations, which aim to address corporate impacts on the environment and human rights, will now apply only to very large EU firms employing over 5,000 people or generating more than €1.5 billion in annual turnover. The same criteria will apply to foreign companies operating within the EU. These firms will be required to identify, prevent, and address adverse impacts in their operations and supply chains.
Importantly, the approach will be risk-based, meaning companies are only expected to seek supply chain information when there is a reasonable likelihood of adverse effects. Civil liability will not be enforced at the EU level; instead, affected parties may pursue claims under national legal frameworks. Penalties for serious violations could reach up to 5% of a company’s global turnover.
The proposed changes aim to ease compliance burdens while preserving key sustainability goals. If approved in the next plenary session, negotiations with EU governments are expected to begin on October 24.
