Negotiations commenced on November 18, 2025, between the European Parliament and EU governments to approve a significant recalibration of the bloc’s corporate sustainability architecture. This decisive process was set in motion by a parliamentary vote days earlier that backed a proposal to sharply streamline the mandatory environmental, social, and governance (ESG) disclosure rules, effectively limiting the full weight of the requirements to only the region’s largest companies.
The Parliament’s position, as reported by ESG News on November 13, 2025, raises the entry point for mandatory reporting under the Corporate Sustainability Reporting Directive (CSRD) and related standards to firms with an annual turnover above €450 million and more than 1,750 employees.
This regulatory reset is explicitly designed to cut disclosure complexity and lower compliance costs across the financial sector and its supply chains. According to the legislative proposal, the scope of upcoming due diligence duties will also be narrowed, applying only to companies with more than 5,000 employees and a turnover exceeding €1.5 billion. For these largest corporations, the due diligence obligations will shift toward a risk-based approach, allowing them to rely on publicly available and existing information wherever possible.
The revised architecture, as detailed in the proposal, suggests a lighter and more flexible compliance environment, crucially removing the prior need for companies to prepare transition plans specifically aligning their business models with the Paris Agreement.
The political impetus behind this move reflects a wider concern that regulatory load is dampening investment appetite, threatening industrial competitiveness at a time of economic uncertainty. Citing the lead figure on the file, Swedish MEP Jörgen Warborn stated that the initiative shows Europe “can be both sustainable and competitive,” arguing that the goal is to provide businesses with the clarity needed to invest and grow. This simplification drive is part of the Commission’s broader Omnibus I simplification package, which targets the removal of duplication and reduction of reporting fatigue across value chains.
To aid navigation through the complex, albeit simplified, requirements, the European Parliament has also called for a dedicated digital portal offering free access to templates and guidelines. If finalized, the revised framework would represent one of the most significant recalibrations of Europe’s corporate sustainability landscape since mandatory rules were introduced, but market observers warn that the scaled-back disclosure could limit investor access to consistent ESG data on mid-cap firms, while the shift to national enforcement for due diligence penalties may add complexity to cross-border risk assessments.
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