Lawmaker groups holding a majority in the European Parliament have reached an agreement to further weaken the European Union’s corporate sustainability due diligence directive (CSDDD), lawmakers and officials told Reuters on Wednesday.
The law, adopted last year, requires companies to address human rights and environmental violations in their supply chains or face fines of up to 5% of global turnover. It has become one of the most politically divisive pillars of Europe’s green policy agenda, drawing resistance from member states such as Germany and France, as well as from the United States, Qatar, and multinationals including Exxon Mobil.
Under the new compromise, the CSDDD would only apply to companies with at least 5,000 employees and 1.5 billion euros ($1.74 billion) in global turnover — a major shift from the current thresholds of 1,000 employees and 450 million euros.
“I’m focusing on making sure that we put Europe back to growth, so that we can produce more jobs and more long-term prosperity,” said Jorgen Warborn, a centre-right lawmaker from the European People’s Party (EPP) leading the negotiations, speaking to Reuters.
The EPP, the largest group in Parliament, struck the deal with socialist and liberal lawmakers to simplify reporting requirements and delay enforcement before the directive takes effect in 2027.
Socialist lawmakers initially resisted the proposal but said they accepted it to prevent the EPP from reaching a harsher deal with far-right lawmakers. “This compromise is not our preferred option, but the alternative was a worse EPP agreement with the far right,” a spokesperson for the Socialists and Democrats group told Reuters.
Dutch Socialist lawmaker Lara Wolters resigned as the group’s negotiator in protest at the agreement.
An official from the Renew liberal group confirmed its support, giving the coalition a parliamentary majority. The European Parliament is expected to vote on the revised proposal later this month before final negotiations with EU member states.
The move reflects growing tensions within the bloc over how to balance corporate accountability with economic competitiveness — a debate that has come to define Europe’s broader climate and sustainability agenda.
