EU lawmakers are taking a step back on sustainability. The European Parliament’s Legal Affairs Committee (JURI) recently approved major changes to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The move raises reporting thresholds, exempts more companies, and softens liability mechanisms — effectively narrowing who must comply.
The Legal Affairs Committee (JURI) of the European Parliament voted to raise the thresholds for both major sustainability directives.
Under the new proposal, only companies with over 1,000 employees would need to comply with the CSRD, compared to the original 250. For the CSDDD, the bar rises even higher: companies must have 5,000 employees and €1.5 billion in turnover before due diligence requirements apply. The controversial civil liability clause has also been dropped, meaning victims or communities can no longer bring direct claims against corporations under this framework.
These revisions would also exempt listed subsidiaries and certain financial entities, significantly narrowing the scope of companies that must report on or manage sustainability risks.
While the changes still require approval from the full Parliament and the European Council, the direction is clear: the EU is prioritizing economic competitiveness and reducing administrative burdens, even if that means delaying progress toward comprehensive corporate accountability.
The rollback reflects a combination of political pressure and practical fatigue. Many governments and industry groups argued that the original rules were too heavy-handed, especially during a period of economic uncertainty. Some Member States — notably France and Germany — pushed for lighter versions, arguing that small and mid-sized firms were being dragged into complex frameworks meant for multinationals.
There’s also a wider political dimension. The EU’s sustainability agenda was launched with ambitious targets under the Green Deal. But as implementation began, reality set in: the reporting demands were resource-intensive, the timelines were tight, and companies struggled to keep up.
By scaling back, lawmakers are hoping to calm the backlash while preserving the broader framework. In short, the EU isn’t abandoning sustainability — it’s slowing the pace to make it politically and economically manageable.
For many companies, this moment brings temporary relief. Some organizations will no longer fall under mandatory ESG reporting requirements. That could reduce the immediate need to align with ESRS or prepare detailed double materiality assessments.
But the relief comes with a catch. Even if the EU relaxes the rules, the expectation for transparency remains strong. Large buyers, investors, and consumers continue to demand credible ESG data. The pressure to disclose won’t disappear — it’s just shifting from regulatory compliance to market-driven accountability.
There’s also the risk of regulatory uncertainty. These proposals still have to pass multiple rounds of negotiation, and the final version could look different again. Implementation timelines may also be extended, pushing compliance out to 2026 or later. For companies trying to plan ahead, this creates confusion: invest now or wait?
The smart answer lies somewhere in the middle. Use this period to strengthen internal systems, refine data quality, and clarify responsibilities across departments. If the rules tighten again — which history suggests they will — your company will already be ahead of the curve.
Even though these revisions offer breathing space, companies should treat this as an opportunity to prepare rather than pause. The EU may be easing up now, but sustainability expectations are only growing across markets. Governments, buyers, and consumers are aligning around the same principle: transparency drives trust.
Businesses that build strong ESG foundations today won’t need to scramble tomorrow. That means documenting data sources, assigning accountability across teams, and using systems that simplify reporting rather than complicate it.
The EU’s decision to raise reporting thresholds is a political recalibration, not a retreat. The sustainability conversation is still moving forward — just at a different pace. For companies, the message is clear: don’t wait for legislation to force your hand.
Those who invest in good data, efficient processes, and transparent reporting now will be the ones shaping the sustainability landscape later. Regulations may rise and fall, but accountability is here to stay.
And with tools like Passionfruit, answering ESG questionnaires becomes easier and more reliable the part isn’t compliance anymore — it’s deciding how far ahead you want to be.
