EU scales back sustainability rules for large companies

European Union countries have formally approved changes to rules requiring companies to address environmental and human rights risks in their supply chains. EU ministers endorsed the amendments after months of pressure from businesses and governments, including the US and Qatar.

The revisions scale back the corporate sustainability due diligence directive and will now apply only to the largest companies, defined as those with more than 5,000 employees and annual turnover of €1.5 billion. The same thresholds will apply to foreign companies generating such turnover within the EU.

Fines for violations may reach up to 3 per cent of global net turnover.

The EU has also postponed the compliance deadline until mid-2029 and removed the obligation to adopt climate transition plans. The changes extend to the sustainability reporting directive, which will now apply only to companies with more than 1,000 employees and turnover of €450 million.

The measures have drawn criticism from environmental groups, while some governments argue they reduce the regulatory burden. The changes are due to take effect in the coming weeks.

(reuters, max)