In short: 

• Sustainability reporting will be required from companies with over 1,000 employees and a net annual turnover of over €450 million
• Smaller companies with fewer than 1,000 employees will be protected from a shift in responsibility for reporting
• Only large corporations with more than 5,000 employees and a net annual turnover of over €1.5 billion have to carry out due diligence
• Due diligence rules will apply from July 2029 

Sustainability reporting simplified

Only EU companies employing on average over 1,000 employees and with a net annual turnover of over €450 million will have to carry out social and environmental reporting. The rules will also apply to non-EU companies with net turnover in the EU of over €450 million and to their subsidiaries and branches generating turnover higher than €200 million in the EU.

The reporting requirements will be significantly simplified, and sector-specific reporting will become voluntary. Co-legislators ensured that companies required to prepare sustainability reporting will not shift that responsibility to their smaller business partners. Firms with fewer than 1,000 employees will not have to provide information to their bigger business partners beyond what is included in the voluntary reporting standards. To facilitate compliance, the Commission will establish a digital portal with access to templates and guidelines on EU and national reporting requirements. 

Due diligence obligations for corporations

Fewer companies will need to carry out due diligence on reducing their negative impact on people and the planet. Under the revised rules, this will only be required from large EU corporations with more than 5,000 employees and a net annual turnover of over €1.5 billion and for non-EU companies above the same turnover threshold in the EU. They will have to carry out scoping exercises to identify risks in their chain of activities and they should only ask for information from business partners with fewer than 5,000 employees when the information for in-depth assessment cannot be obtained another way.

Transition plans ensuring a company’s business model is compatible with the shift to a sustainable economy will no longer be required. Businesses will be liable at the national level for failures to apply the rules correctly and could face fines of up to 3% of the firm’s net worldwide turnover.

The due diligence directive will only apply from 26 July 2029 for all businesses within its scope. 

Next steps

The final text will have to be formally approved by Council and the directive will enter into force twenty days after its publication in the Official Journal. 

See full details in the adopted text:  https://www.europarl.europa.eu/plenary/en/texts-adopted.html