EU delays corporate sustainability rules as businesses push back

European lawmakers have voted to delay sustainability reporting and supply chain checks for thousands of companies, giving themselves more time to rewrite the regulations amid industry pressure.

Kate Abnett reports for Reuters.

In short:

• The European Parliament voted to postpone mandatory sustainability reporting for most small and mid-sized companies until 2027, with first reports due in 2028.
• The EU also agreed to delay its supply chain due diligence law by one year, now set to take effect in 2028.
• Lawmakers aim to reduce the scope of the rules, potentially exempting 80% of the initially affected companies by raising the employee threshold from 500 to 1,000.

Why this matters:

The European Union’s ambitious sustainability disclosure rules, intended to lift the veil on corporate impacts to both people and planet, are facing serious pushback just as global environmental oversight grows more fragmented. Originally framed as a cornerstone of the EU Green Deal, the regulations require companies to publicly report how their operations affect climate, biodiversity, labor conditions, and human rights. But under mounting pressure from industry groups and some member states, implementation is now delayed or diluted.

Critics say this delay risks undermining transparency at a critical moment, when global supply chains are under increasing scrutiny and environmental tipping points loom. European companies argue they’re being saddled with costly compliance burdens, especially as the U.S., under President Trump, has scaled back climate and ESG mandates, and China continues to emphasize economic growth over environmental rigor.

Related: Europe moves to ease corporate climate reporting rules