US lobbying reaps its rewards, leaving many EU companies unhappy
Companies will not have to submit climate transition plans under proposals to slash EU sustainability rules agreed largely by centre and far-right MEPs on Thursday morning. US lobbying against the plans was widely cited as influential in their disappearance.
The agreed proposal, which still needs to be negotiated with EU member states and the European Commission, would remove central elements of the bloc’s corporate sustainability framework.
It would increase the threshold for the Corporate Sustainability Reporting Directive, making it applicable only to businesses with more than 1,750 employees and €450mn in global turnover.
The scope of the Corporate Sustainability Due Diligence Directive would be limited to EU companies with 5,000 employees and more than €1.5bn in global turnover, and €1.5bn for non-EU companies.
In addition to the removal of any requirement for companies to draw up transition plans, the proposal for harmonised, EU-wide civil liability provisions has disappeared, and there will be no sanctions or penalties for companies not meeting the remaining parts of the CSDDD.
“There was a demand from the US to delete climate plans, and the climate plans have gone,” liberal MEP Pascal Canfin told journalists during a briefing after the vote.
The decision was taken as MEPs also voted in favour of a 2040 climate target that would cut EU emissions by 90 per cent.
Partner at Sidley Austin in Geneva, Nicolas Lockhart, said that the removal of mandatory climate transition plans from CSDDD would “likely lead to litigation in Member States’ courts to establish a legal duty under the general law for companies to implement an effective climate transition plan”.
He cited a case before the Supreme Court in the Netherlands, where the plaintiff seeks to establish a general duty under Dutch law for companies to implement climate transition plans that cover Scope 1, 2 and 3 emissions and that makes an adequate contribution to limiting the temperature rise to 1.5C.
Jörgen Warborn, the parliament’s lead negotiator on the omnibus and member of the centre-right European People’s party, said the vote “put competitiveness back on the agenda”.
“By cutting excessive reporting obligations, we are freeing companies from unnecessary bureaucracy so they can invest where it actually matters — in innovation, clean technologies and jobs in Europe,” he said.
In a statement, the EPP said the vote was about “showing our small and medium-sized enterprises, which are struggling to remain competitive, that we have heard their message”.
Yet many companies, including SMEs, disagree with the EPP’s version of the facts.
A ‘practical’ corporate tool
Furniture group Inter Ikea said the CSRD and the CSDDD were “needed to ensure that companies compete on the basis of responsible conduct, that data remains comparable along value chains, and that risks and impacts can be effectively identified, mitigated and reported on”.
“Keeping Europe competitive and making the framework less burdensome, especially for smaller companies, are important goals, but simplification should make compliance clearer and more efficient without lowering the main ambitions of the directives,” a company spokesperson told Sustainable Views.
There was a demand from the US to delete climate plans, and the climate plans have gone
Inter Ikea underlined the importance of climate transition plans “as they give companies a practical tool for contributing to the EU’s climate targets”.
Claus Teilmann Petersen, stakeholder engagement and human rights manager at Danish clothing company Bestseller, whose brands include Jack & Jones and Vero Moda, said his company supports the original CSDDD text and its alignment with OECD and UN due diligence guidance. “The omnibus will dramatically reduce the number of eligible companies and water down requirements,” he said.
Warborn’s “SME shield . . . blocks efficient and effective due diligence, leading to more adverse impacts than had the directive not been introduced in the first place”, said Teilmann Petersen.
We Mean Business Coalition director of net zero finance Jane Thostrup Jagd said the vote was “deeply disappointing”. Companies “need stability and predictability to operate effectively”, she told Sustainable Views. “Uncertainty is poison for businesses and, ultimately, for their competitiveness.”
If the proposed “heavy reduction” in the number of companies covered by the CSRD is adopted, “one must ask whether there will be a sufficient universe of reporting companies for investors and other capital providers to allocate capital responsibly. This would weaken their ability to identify the winners of tomorrow — and to generate returns,” said Thostrup Jagd.
In October, a letter from the chief executives of TotalEnergies and Siemens to French President Emmanuel Macron and German Chancellor Friedrich Merz suggested that “CEOs call for the full abolishment of CSDDD as a clear and symbolic signal”. It was signed by TotalEnergies and Siemens “in the name” of 46 CEOs participating in the 2025 Franco-German business meeting in Evian, France.
Since then, the Business & Human Rights Resource Centre and Social LobbyMap have asked another five French and five German companies represented at Evian whether it is their company’s position “to call for the full abolition of the CSDDD”.
The centre published the companies’ reactions on Thursday and said none of those that had provided a response favoured abolishing the directive. They include BNP Paribas, food company Danone, carmaker BMW and chemicals firm BASF.
More and better data is needed
Elise Attal, head of EU policy at the Principles for Responsible Investment, said the parliament’s position “risks hindering the EU’s economic transition and setting back its future competitiveness”, and creating “additional complexity and cost” for investors and companies.
She said businesses had been clear on the need for “targeted adjustments to simplify technical rules across the EU’s sustainable finance framework”, but warned that “a step change in policy” would “weaken investor confidence and undermine the EU’s competitiveness”.
Companies need stability and predictability to operate effectively. Uncertainty is poison for businesses and, ultimately, for their competitiveness
Exempting more than 95 per cent of companies from the CSRD and CSDDD does not remove the need for financially material sustainability data, but makes it harder to acquire and increases costs as investors resort to ad hoc requests and third-party providers, she added.
Data published at the beginning of the week by climate tech company Dcycle, based on a survey of 500 sustainability managers and “C-level” executives across Europe, shows only one in five say they fully trust their company’s ESG data. They say both data collection and reporting is fragmented and inefficient.
Dcycle co-founder and CEO Juanjo Mestre suggested companies are “treating sustainability data as an afterthought, when it’s becoming as important to investors and regulators as their financial performance”.
‘A cosmetic change’
Those companies still covered by the CSRD will, nonetheless, remain subject to reporting standards that are broader than elsewhere and that cover the full range of environmental and social topics.
“Today’s vote is a cosmetic change but doesn’t address Europe’s infatuation for regulations above action,” Stefan Borgas, CEO of RHI Magnesita, a producer of high heat-resistant materials, told Sustainable Views.
Today’s vote is a cosmetic change but doesn’t address Europe’s infatuation for regulations above action
He called for “simpler rules aligned with international standards” that reward “real sustainability performance improvements” to allow companies to “invest more in action such as electrification and recycling, and less in paperwork”.
“This is what Europe would need to reduce emissions, become a green tech leader and improve industrial competitiveness,” said Borgas.
‘Dismantles the Green Deal’
Politicians, academics and campaigners also drew attention to the potential wider implications of the vote.
Canfin said it is “the first time in the history of EU democracy” that an EU law will be negotiated where the parliament’s position has been agreed by a majority of right and extreme-right MEPs. “This is very sad and might have far-reaching consequences,” he said.
Alberto Alemanno, Jean Monnet professor of EU Law at HEC Paris and democracy fellow at Harvard University, said the vote “not only dismantles the Green Deal but also redefines the political majority governing Europe”.
He warned of “devastating repercussions for the EU’s economy, society and democratic foundations, enabling the US administration to double down on its influence over the EU”.
“The EU’s self-imposed deregulatory push appears unstoppable, at least for now,” said Alemanno. He forecasts “a wave of litigation . . . which will paradoxically condemn Europe to the unpredictability that the EU simplification agenda meant to avoid”.