BRUSSELS/LONDON: The European Commission is preparing to ease sustainability reporting requirements for businesses as part of a broader effort to cut regulatory burdens and boost competitiveness, according to a draft document seen by Reuters.

The proposal, set to be published next week, aims to simplify environmental and social reporting rules while addressing pressure from member states such as Germany and France, which have called for reduced requirements. At the same time, countries like Spain argue that maintaining strict standards is essential to upholding the EU's commitments to environmental protection and human rights.

The draft outlines revisions to the Corporate Sustainability Reporting Directive (CSRD), which currently mandates companies to disclose environmental and social impact data. If approved, the new rules would apply only to businesses with more than 1,000 employees and an annual turnover exceeding 450 million euros—a significant increase from the current threshold of 250 employees and 40 million euros in turnover.

Additionally, the EU will abandon plans to introduce sector-specific reporting standards by June 2025, further reducing compliance obligations.

The draft also proposes delays to the EU's Corporate Sustainability Due Diligence Directive (CSDDD), which requires large companies to monitor and address human rights and environmental issues within their supply chains.

Under the revised plan, companies would only be responsible for conducting due diligence on their direct business partners and subsidiaries—excluding subcontractors and indirect suppliers from scrutiny.

This move comes as the EU grapples with a changing global regulatory landscape. U.S. President Donald Trump has vowed to dismantle regulations that impact American businesses, increasing pressure on the EU to ensure its companies remain competitive.

The upcoming "omnibus" proposal reflects Brussels' push to balance sustainability goals with economic growth as industries seek relief from complex reporting obligations. However, the changes are expected to spark debate among EU members, with some nations advocating for deregulation while others push to maintain strict environmental and social oversight.

While the draft may still change before its official release, the Commission's plan signals a significant shift in EU sustainability policy—one that could redefine corporate responsibilities in Europe.