EU Lawmakers Move to Scale Back ESG Directives

European Union lawmakers voted Monday to dramatically scale back two flagship sustainability rules, narrowing their scope to the bloc’s largest companies after months of pushback from industry, Bloomberg reported.

The European Parliament’s Legal Affairs Committee (JURI) approved changes that would raise the bar for which firms must comply with the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), the news agency said.

Under the panel’s position, CSRD would apply only to companies with at least 1,000 employees and €450 million in annual revenue, while CSDDD would cover firms with at least 5,000 employees and €1.5 billion in revenue. Both directives were originally designed to reach companies with 250 or more workers.

Lawmakers also voted to drop a common civil-liability regime under CSDDD, though firms in scope would still need transition plans aligned with EU climate law and the Paris Agreement. Financial holdings and listed subsidiaries would be exempt from CSRD, the news outlet reported.

The vote follows an intense lobbying campaign by business groups across the bloc, who warned the rules risked undermining European competitiveness. CSDDD, which aims to hold companies accountable for human-rights and environmental harms in their supply chains, became a lightning rod in the debate.

“We haven’t been influenced in any way by how the US perceives this,” said Jörgen Warborn, the Swedish center-right lawmaker steering negotiations, at a press conference cited by Bloomberg. “I am standing up for European competitiveness.”

Washington has repeatedly flagged concerns about the directives’ extraterritorial reach, with the US Chamber of Commerce branding them “unprecedented regulatory overreach,” according to the report.