BRUSSELS — In a dramatic late‑year push, EU institutions struck a deal that will exempt more than four in five companies from detailed environmental reporting and narrow the scope of a flagship supply‑chain law.
The package, the first of several so‑called omnibus simplification bills championed by Commission President Ursula von der Leyen, sharply raises the thresholds for who must report environmental data and carry out human rights and environmental due diligence. Negotiators say the goal is to cut red tape and make European industry more competitive; critics warn it guts protections at a moment of worsening climate impacts.
What changed — in plain numbers
Under the compromise, the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) will apply only to significantly larger firms than originally planned. Reporting obligations now kick in at companies with more than 1,000 employees and at least €450 million in net turnover. Supply‑chain due diligence — the part that would require firms to identify and address human rights and environmental harms across suppliers — is limited to the very largest companies (5,000+ employees and €1.5 billion turnover).
The deal also removes an EU‑level civil liability framework that would have allowed victims to sue companies in EU courts over harms linked to their supply chains. Obligations for companies to publish climate transition plans — concrete roadmaps explaining how they will reduce emissions — were dropped as well.
Those changes mean a vast majority of Europe’s businesses will no longer face mandatory reporting on greenhouse gas emissions, water use, worker safety in a warming climate, chemical releases or supplier practices across distant corners of their value chains.
Politics, not just policy
This was not technocratic housekeeping. The vote exposed fractures at the heart of European politics. The center‑right European People’s Party (EPP) abandoned a long‑standing informal bar on cooperating with the far right to secure the deal, a move critics said weakened democratic norms in pursuit of a legislative win. The negotiations pushed the coalition that helped re‑elect von der Leyen to the brink of collapse and prompted furious exchanges among MEPs and civil society.
Denmark’s Marie Bjerre, speaking for the Council during negotiations, called the agreement “an important step towards our common goal to create a more favourable business environment to help our companies grow and innovate.” The Council’s official statement frames the outcome as a boost to EU competitiveness and a trimming of unnecessary paperwork.
Who’s applauding — and who’s alarmed
Industry groups and some government ministers welcomed the simplification as overdue relief for companies that argued heavy compliance costs were throttling growth and making EU firms less able to compete with U.S. and Chinese rivals.
Human rights lawyers, NGOs and more than 100 academics and business and human rights practitioners begged negotiators not to strip the CSDDD. They warned that removing harmonised civil liability will create legal uncertainty across member states, fragment protections, and undermine the international due‑diligence standards set out by the UN Guiding Principles and OECD guidelines. A letter from practitioners argued that narrowing the law to only the biggest firms and to direct suppliers would incentivise firms to focus on low‑risk parts of their chains and sidestep truly systemic harms.
Leaked documents and reporting in recent weeks have also fed concerns that a coalition of large multinationals pressed hard behind the scenes to water down the rules — a dynamic critics say shows how business lobbying can reshape public interest laws.
Why this matters beyond Brussels
Regulatory choices in the EU ripple through global supply chains. Multinationals often align global practices with EU rules to avoid complexity; weakening the bloc’s standard setters could lower expectations elsewhere. At the same time, firms that face lighter obligations in Europe may gain a short‑term cost advantage over competitors who must comply with stricter regimes elsewhere.
The change also touches industries sensitive to EU regulation: tech companies, hardware makers and platform operators keep a close eye on Brussels’ rulebook — from competition and data laws to safety standards — because fragmented or heavy regulation alters product design and market strategy. That dynamic played out recently when tech companies prepared for consequences of the DMA and related rules, for example in moves such as Apple’s decision to change iPhone–Apple Watch Wi‑Fi syncing in the EU.
And as corporate reporting and disclosure evolve, so do tools that investors and regulators use to scrutinise firms. The rise of powerful internal and public data tools — like Gemini’s deep‑research features used in finance products — means scrutiny isn’t limited to what companies are forced to publish. Still, mandated, comparable reporting remains one of the only scalable ways for civil society, courts and investors to hold companies to account.
What happens next
MEPs will cast a final vote on the omnibus on Dec. 16, and they retain the power to endorse or reject the trilogue outcome. If Parliament rejects the text, co‑legislators would have to return to the negotiating table, a politically risky move given how fraught these talks have been.
For now, the compromise sets a precedent. The Commission has flagged at least 10 more omnibus bills on issues from data protection to chemicals and agriculture. Those debates will test whether Brussels continues down a deregulatory path aimed at growth — or whether member states and MEPs push back to preserve the EU’s role as a global rule‑maker for environmental and human rights standards.
Whatever happens in the coming weeks, the trilogue has already reshaped expectations: businesses planning compliance programs will adjust the scale of their efforts, NGOs will dial up litigation and advocacy strategies to plug gaps, and governments will grapple with how to square competitiveness arguments with legal and ethical obligations to prevent harm.
This law’s passage — or its potential reversal — won’t be just another Brussels story. It will influence who bears responsibility when a factory down a supplier chain pollutes a river, when workers in a drought‑hit region lose livelihoods, or when consumers demand transparency about the products they buy. Lawmakers, companies and campaigners now face a practical question: how to reconcile promises of growth with the realities of an overheating planet and fragile supply‑chain communities.