The European Parliament, together with negotiators from EU member states, has reached a provisional agreement on updated sustainability reporting and due diligence rules for companies operating in the European Union. The agreement forms part of the broader Omnibus I simplification package aimed at reducing regulatory burden while preserving key elements of corporate sustainability reporting and due diligence law.  

Under the provisional deal, sustainability reporting requirements will now apply only to companies that employ more than 1,000 people on average and generate a net annual turnover exceeding €450 million. Similar thresholds will apply to non-EU companies that generate the same level of turnover within the EU. Smaller firms with fewer than 1,000 employees are protected from having reporting responsibilities pushed onto them beyond what is outlined in voluntary standards, and sector-specific reporting will become voluntary.  

The rules on due diligence have been simplified and narrowed so that only very large corporations, those with more than 5,000 employees and a net annual turnover above €1.5 billion, will be required to carry out due diligence on adverse impacts on people and the environment. Obligations to prepare climate transition plans under due diligence have been removed, and firms’ liability will remain at the national level, with penalties capped at a maximum of 3% of net global turnover. The revised due diligence rules are expected to apply from 26 July 2029.

The provisional agreement still needs formal approval by the Council of the European Union before it can enter into force. The updated framework is designed to simplify reporting obligations, focus compliance on the largest companies and support the EU’s aim of balancing sustainability goals with competitiveness and reduced administrative burden.

For further information, visit the European Parliament press release.