The EU Commission’s latest proposal to revamp sustainability reporting regulations could exempt nearly 80% of companies from mandatory disclosures under the Corporate Sustainability Reporting Directive (CSRD), sparking criticism from environmental and human rights groups.
While large multinationals will still be required to report, the proposed revisions raise CSRD thresholds to companies with over 1,000 employees and €50m in turnover, effectively removing reporting obligations for thousands of small and medium-sized enterprises (SMEs).
The Corporate Sustainability Due Diligence Directive (CSDDD) is also set for substantial revision.
Valdis Dombrovskis, the EU economy commissioner, unveiled the measures on Wednesday, presenting them as an effort to streamline reporting requirements, particularly for smaller businesses.
The package is framed as a response to rising energy costs, geopolitical instability, and diverging global sustainability policies.
Meanwhile, US opposition to the CSDDD and CSRD has intensified, with prominent House and Senate Republicans and officials from 26 states urging the Trump Administration to act against the EU regulations.
Checks and balances
Civil society organizations have condemned the proposals, warning they could significantly weaken corporate accountability and transparency.
Mighty Earth, a leading environmental advocacy group, labeled the changes a direct threat to corporate transparency and highlighted the most concerning aspects:
- Weakening corporate liability: Removing provisions that hold companies accountable for harm caused by non-compliance with due diligence obligations.
- Reduced supply chain oversight: Limiting due diligence to direct suppliers, excluding broader value chain risks.
- Exemptions for smaller suppliers: No due diligence requirements for suppliers with fewer than 500 employees.
- Weakened climate commitments: Companies would no longer be obligated to implement climate transition plans.
- Longer due diligence intervals: Instead of continuous oversight, companies could conduct due diligence as infrequently as every five years.
The International Federation for Human Rights (FIDH) also voiced strong opposition: “The Omnibus package, announced under the guise of cutting red tape, is in fact a major step backward. It sacrifices much-needed binding regulations in favor of deregulation, eroding the EU’s reputation as a global leader in environmental and human rights protection,” the organization stated.
“This is not simplification—it is full-scale deregulation,” said Nele Meyer, director of the European Coalition for Corporate Justice. “By stripping due diligence requirements, scrapping stakeholder engagement, and removing civil liability, the Commission is effectively giving corporations a free pass to operate without consequences.”
Political challenges ahead
The proposal now faces intense scrutiny from EU Member States and the European Parliament, where political dynamics are shifting.
“Given recent political upheavals in key EU nations and an increasingly right-leaning Parliament, the Omnibus law could dismantle years of progress in corporate due diligence and sustainability reporting,” warned Mighty Earth in a statement.