European Parliament votes to gut EU sustainability rules

13 November 2025 - 17:04 h

Media Alert

On 13 November 2025, the European Parliament adopted its position on the Omnibus I, amending the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Taxonomy Regulation. Finance Watch strongly regrets the decision of the EPP to align with the far-right and further weaken both reporting obligations and due diligence requirements.

While the Commission and Parliament had already proposed raising the CSRD application threshold from 250 to 1,000 employees, the Parliament has now gone even further: excluding companies with fewer than 1,750 employees from sustainability reporting obligations.

The original CSRD aimed to expand the scope of the Non-Financial Reporting Directive (NFRD) from 11,900 to 50,000 companies. In a 180° turn, the Parliament’s position would now reduce this number heavily, limiting CSRD coverage to fewer than 5,000 companies.

The simplification argument is inaccurate. Companies excluded from scope will still need to provide information to their business partners, increasing administrative burdens, with fragmented, duplicative demands that are harder and costlier to meet. Consequently, financial institutions will face data quality issues, undermining both their risk management frameworks and their own transition planning.

Vincent Vandeloise, Senior Research and Advocacy Officer

The reduction of the CSDDD’s scope to companies with more than 5,000 employees would also exclude around 40% of companies currently covered. Even more concerning, the European Parliament proposes deleting the requirement for companies to adopt transition plans. This is the bridge between reporting and real-world outcomes. It establishes a level of ambition that goes beyond mere transparency. The deletion of transition plans would also have far-reaching legislative consequences, as it would disrupt cross-references designed to ensure consistency across the EU sustainability framework.

The CSRD shows that banks are fully capable of producing credible plans. Practices just require some harmonisation. Pressure from outside the EU, including the US and Qatar, to dilute obligations under the CSDDD should not undermine Europe’s ambitions. It is important that CSDDD transition plans are binding and that rules are strengthened to ensure credible, enforceable strategies, not just box-ticking exercises.

Vincent Vandeloise, Senior Research and Advocacy Officer