European Parliament endorses lighter sustainability reporting for firms

Target is to finalise legislation by the end of the year.

Members of the European Parliament (MEPs) have expressed their support for legislative changes aimed at simplifying sustainability reporting and due diligence duties for businesses.

Part of the Omnibus I simplification package put forward by the European Commission earlier this year, the proposal is pushing to make due diligence and sustainability reporting lighter.

In the MEPs' view, social and environmental reporting should be carried out only by companies with a net annual turnover of more than $518.5m (€450m) and an average of over 1,750 employees.

"Reporting standards would be further simplified and reduced, requiring fewer qualitative details, and sector-specific reporting would become voluntary," a European Parliament announcement, which outlined the legislative body's negotiating position on the matter, went on to note.

Additionally, MEPs believe that due diligence requirements should only apply to corporations that have a net annual turnover of over $1.7b (€1.5b) and employ over 5,000 people.

Under revised regulations, a transition plan would no longer be required, whilst breaches of due diligence obligations would be punishable at the national (instead of European Union) level.

"We are simplifying rules, cutting costs, and giving businesses the clarity they need to grow, invest, and create well-paying jobs," commented Legal Affairs Committee Rapporteur Jörgen Warborn.

The target is to get the new legislation finalised by the end of 2025.