European Parliament Postpones Decision on Sustainability Reporting Simplification to November

Efforts to streamline corporate sustainability obligations under EU law have encountered delays, as Parliament moves toward a plenary decision in November.

On 22 October the European Parliament rejected the mandate of the Legal Affairs Committee (JURI) regarding the proposal to simplify sustainability reporting and due diligence rules. The mandate had been adopted by the Legal Affairs Committee on 13 October by 17 votes in favour, 6 against and 2 abstentions. In plenary, 309 voted in favour of the mandate, 318 against, and 34 abstained. As a result, the Parliament will examine and vote on amendments to the file during the 13 November plenary session in Brussels before discussions with the Council can begin.

Scope Reductions Proposed by the Committee

MEPs want to reduce the scope further to cover only companies with on average more than 1,000 employees and a net annual turnover above €450 million. This would also apply to sustainability reporting under taxonomy rules, which classify environmentally sustainable investments. Reporting would have become voluntary for undertakings outside this threshold and sector specific reporting would also have been voluntary. The proposal envisaged simplified standards focusing more on quantitative information and sought to prevent larger undertakings from passing reporting requests beyond voluntary standards down the value chain.

Due Diligence Simplification Elements

MEPs want to limit due diligence obligations to large EU companies with more than 5,000 employees and a net annual turnover above €1.5 billion, as well as to non-EU companies with net turnover in the EU above the same threshold. They support a risk-based approach to collecting information from business partners instead of systematic data requests.

Next Steps in the Legislative Procedure

Following rejection of the mandate and pursuant to Rule 72(3), Parliament will vote on amendments in November. Once it has adopted its position, discussions with the Council, which adopted its own position on 23 June, can begin. The objective is to finalise the legislation by the end of 2025.

Broader Context of the Simplification Package

The proposals are part of the Omnibus I simplification package presented by the European Commission on 26 February 2025 to address competitiveness concerns while keeping sustainability objectives. Parliament had previously approved via urgent procedure in April 2025 provisions deferring the application of sustainability reporting and due diligence obligations for certain undertakings. The November vote will determine the Parliament’s stance on the extent of revision of current frameworks to reduce administrative burden while maintaining the Union’s sustainability policy architecture.