The European Parliament has voted in favour of a substantial simplification of EU legislation on sustainability reporting and due diligence for large companies. The fact that extreme parties supported these simplifications has triggered indignation and moral condemnation. But the real question is: what preceded these populist one-liners?
No one doubts the noble objective
This concerns the legislation on sustainability reporting (CSRD) and the EU’s due diligence directive (CSDDD, or CS “triple D”). These are ambitious rules adopted in the previous legislature to require companies to report extensively on sustainability parameters and to hold them accountable labour exploitation, environmental damage and climate harm throughout their entire value chain. In essence, the law obliges large companies not only to identify abuses such as exploitation, forced labour, severe deforestation and significant environmental impacts, but to address them. Non-compliance can lead to fines of up to 5% of annual turnover.
No one disputes the noble goal. Tackling social abuses and environmental harm is self-evident. But from the beginning, it was clear that this legislation risked becoming a bureaucratic monster that would present European companies with enormous challenges. cd&v MEP Tom Vandenkendelaere warned at the time – and therefore abstained in the final vote – that the rules risked saddling SMEs with additional obligations. He rightly pointed out that larger companies could shift responsibilities onto smaller actors in the chain, and that civil liability might make companies more reluctant to invest in sustainability because of legal risks. The law was nevertheless adopted.
But times change. As the deadlines drew nearer, business voices grew louder: this is unworkable. The same message appears in the “Antwerp Declaration”, in which dozens of European industrial players call for a “European Industrial Deal” and urge the EU to scale back excessive reporting requirements and apply much stricter impact assessments on competitiveness and innovation. Administrative simplification was therefore an absolute priority for cd&v and the EPP in the election campaign – and voters rewarded that stance. Upon taking office, Ursula von der Leyen immediately presented a competitiveness compass, with a Clean Industrial Deal as its centrepiece. It announced a series of omnibus packages to simplify complex legislation and reduce reporting burdens. The goal: 25% less reporting for large companies and 35% less for SMEs.
A centrist agreement torpedoed
The first package, Omnibus I, arrived in February. It proposed far-reaching simplifications to the CSRD and the CSDDD. In practice, it would remove around 80% of companies from the CSRD’s scope and refocus the rules on the very largest firms. Additional safeguards were introduced to prevent obligations from being pushed down onto smaller companies in the value chain. In the new proposal, reporting requirements would apply only to companies with more than one thousand employees and turnover above fifty million euros. In the same spirit, the CSDDD’s civil liability regime would be scrapped while maintaining victims’ right to compensation. Companies would receive more time to prepare for the new rules, and due diligence obligations would be limited to direct business partners, as extending responsibility to indirect partners in complex value chains proved unworkable in practice. The so-called trickle-down effect onto SMEs would be curbed – exactly what cd&v had warned about years earlier.
After intense negotiations, an agreement was reached in the Committee on Legal Affairs between the EPP, the Socialists and the Liberals – the classic centrist coalition. In today’s increasingly fragmented Parliament, such a deal is no small feat. In the vote, ECR and ESN supported the deal, creating a wide majority. The agreement further refined the scope by limiting the CSRD to companies with more than one thousand employees and turnover above 450 million euros, making sector-specific reporting voluntary, adding further safeguards to prevent spillover effects onto SMEs, and raising the CSDDD threshold to companies with more than five thousand employees. The rules on climate transition plans were also adjusted, partly because these had recently faced heavy international criticism.
Yet this strong and balanced agreement was rejected in plenary: 309 in favour, 318 against. The vote was secret, but the entire EPP and the Liberals honoured the deal, revealing that 31 Socialists had refused to follow it. This internal rebellion – with Socialists joining the extremes at the last minute – prevented a pro-European majority from forming. A missed opportunity.
On majorities, hypocrisy and the failure of moral outrage
With that, everything was back on the table. Ahead of the 13 November plenary vote, the EPP resubmitted its own position, with additional simplifications to make the legislation genuinely workable for a large share of European companies. These changes were submitted exclusively by the EPP, without cooperation from other groups, and certainly not with the extremes. The EPP supported only its own amendments; not a single far-right proposal. The amendments secured a majority, and the revised text passed with 382 votes in favour and 229 against. Even if one were to subtract the 97 far-right votes, the text would still maintain a majority. The attentive reader might say: “Yes, but if you subtract those 97 votes from the ‘yes’ side, they move to the ‘no’ side.” That is true. But that would imply that the left once again relies on the far right to block simplification. The fact that this already happened in the previous plenary, when the centre deal was torpedoed, seems to provoke no outrage at all.
The latest adjustments are straightforward: the CSRD scope moves to companies with more than 1,750 employees, and the mandatory climate transition plans in the CSDDD are removed. The Belgian socialist party Vooruit now shouts scandal and claims that if a factory collapses and casualties occur, it will be the EPP’s fault. But this is pure populist rhetoric. Most Socialists and Liberals had previously supported the platform agreement without any issue. Removing climate plans has nothing to do with factory safety standards. Furthermore, 15 socialists and 17 liberals supported the EPP outcome. Pointing the moral finger at cd&v is easy, but one might just as well point it at their own European Socialist colleagues. The rest of the agreement remains intact, as does the essence of both pieces of legislation. Europe can still make a difference in key value chains without overburdening companies that are already struggling with excessive reporting obligations. By the way, the parliament’s position is almost completely in line with that of the Council. But if that Council, which includes ministers from various political backgrounds, including socialists, holds the same position, does that mean the Council is also far-right?”
Meanwhile, the double standard is striking. Socialists and Greens themselves vote with the far right whenever it suits them – for instance, when blocking simplification, even when a solid centrist agreement is on the table. At the same time, they want to deny the EPP the right to submit amendments or proposals. Anyone claiming that a political group should not submit amendments is denying a fundamental parliamentary right. That would mean the largest group in Parliament may only have a certain opinion when Greens or Socialists allow it – even though those very groups suffered heavy losses in the last European elections while the EPP remained convincingly the largest. The world turned upside down.
It is also worth noting that this week, the EPP pushed hard to achieve strong centrist agreements in three major files – something cd&v consistently advocates. For the multiannual budget and the 2040 climate targets, this succeeded, even with the support of the Greens. And there was initially such an agreement for this omnibus package as well, until 31 Socialists deliberately sank it.
What this is really about
Anyone who focuses solely on moral outrage and majority arithmetic misses the essence. According to trade unions, one million industrial jobs have been lost over the past four years. Restructuring and job losses are widespread, especially in energy-intensive sectors. Europe has shifted from exporter to importer in sectors such as chemicals and steel, and now imports massive quantities of products made outside the EU under far lower social and environmental standards and with far higher CO₂ emissions than those imposed on European companies.
If we want to stop this downward spiral, we must dare to adjust course. Entrepreneurs are clear: a significant simplification of the European regulatory framework is essential. If we fail to recognise this, we risk destroying countless jobs, undermining the foundations of our social welfare model and weakening the protection of our planet. Who benefits from that?