Fewer companies operating in Europe will be made to carry out due diligence on the societal harms they cause, in what green groups have called a “betrayal” of communities affected by corporate abuse.
The gutting of the EU’s sustainability reporting and due diligence rules, which was greenlit by MEPs on Tuesday, slashes the number of companies covered by laws to protect human and ecological rights, and removes provisions to harmonise access to justice across member states.
Social and environmental reporting will be required only of companies with more than 1,000 employees and a net annual turnover of at least €450m, while due diligence will have to be carried out only by companies with more than 5,000 employees and a net annual turnover of at least €1.5bn. The latter requirement has been delayed until 2029.
The vote, which rubberstamps changes negotiated by lawmakers and member states over the past few weeks, also removes “transition plans” from due diligence rules that would make companies show how their business model is compatible with the shift to a sustainable economy.
Jörgen Warborn, a Swedish MEP from the centre-right European People’s party (EPP), said it was “an important first step” in the EU’s efforts to simplify rules across the continent.
“Parliament has listened to the concerns expressed by job creators across Europe,” he said. “Backed by a broad majority, today’s vote delivers historic cost reductions while keeping Europe’s sustainability goals on track.”
The text passed with 428 votes in favour and 218 against. Green groups and rights campaigners criticised the EPP’s alliance with the far right to water down the file, as well as pressure from the US and Qatar, who opposed the rules.
“Today’s vote is a betrayal of people and communities suffering from corporate abuse around the world,” said Nele Meyer, director of the European Coalition for Corporate Justice. “It is deeply alarming to witness how foreign pressure shaped a file that should have been driven by evidence and by the needs of those facing the impacts on the ground.”
Mariana Ferreira, a sustainable finance campaigner at the European branch of WWF, said the outcome reflected “a troubling trend” in the EU parliament. “The conservative bloc has increasingly aligned with far-right agendas, legitimising polarising demands and pushing aside science-based evidence and warnings.”
The European Commission has led a rollback of green rules under the banner of increasing the EU’s competitiveness. The cuts to corporate rules are the first of a series of “omnibus” proposals to simplify existing legislation that critics say amount to deregulation.
In November, the European Ombudsman found procedural shortcomings in the commission’s preparation of the omnibus and other proposals that “taken together, amount to maladministration”. Earlier this month, the research group Somo revealed that an alliance of 11 companies including big US oil firms had worked behind the scenes with the PR firm Teneo to strip the rules of their key provisions.
Warborn, the lawmaker in charge of the file, was the subject of a formal complaint on Monday from Transparency International and other nonprofits, who alleged a conflict of interest for his work as president of lobby group SME Europe. Warborn rejected the allegations as “false” because SME Europe is affiliated with the EPP, with no companies or commercial actors as members.
“Honestly, I think it is a politically motivated accusation,” Warborn said in a press conference after the vote. “The organisations behind this are probably not happy with the outcome, and that’s why they tried to influence the vote the day before.”
