EU sustainability reporting becomes simpler

Amended rules to reduce obligations for firms.

A provisional agreement between European Union (EU) governments and Members of the European Parliament has been approved, essentially updating sustainability reporting and due diligence rules for businesses.

"Only EU companies employing on average over 1,000 employees and with a net annual turnover of over €450m will have to carry out social and environmental reporting," noted a European Parliament announcement following the provisional approval.

"The rules will also apply to non-EU companies with net turnover in the EU of over €450m and to their subsidiaries and branches generating turnover higher than €200m in the EU."

It added: "The reporting requirements will be significantly simplified, and sector-specific reporting will become voluntary."

Whilst a provisional go-ahead is now in place, the European Council will have to provide formal approval for the final text of the updated regulations.

Due diligence obligations, meanwhile, will only be applicable to EU corporations with over 5,000 employees and net annual turnover above €1.5b, as well as non-EU companies surpassing that same turnover threshold in the EU.

"Parliament has listened to the concerns expressed by job creators across Europe," said Legal Affairs Committee Rapporteur Jörgen Warborn. "Backed by a broad majority, [the] vote delivers historic cost reductions whilst keeping Europe's sustainability goals on track.

"This is an important first step in the ongoing efforts to simplify EU rules."