Supporters argue that these changes will make regulations more predictable and less burdensome for businesses amid volatile markets.

These revisions aim to simplify and target sustainability reporting and due diligence requirements, focusing mainly on larger companies with over 1,000 employees and high revenue thresholds.

The revisions follow intense lobbying from countries like France and Germany, which claimed the original rules threatened their economic competitiveness.

Interinstitutional negotiations are expected to continue until the end of 2025, with the European Commission planning a further package to simplify environmental laws.

European leaders, including Macron and Merz, have indicated willingness to revisit the framework amid ongoing opposition.

Support among European business leaders remains strong for climate transition plans, with surveys indicating majority backing for sustainability measures despite some resistance.

The European Parliament's legal committee has approved significant reductions to the scope of the EU's corporate sustainability laws, including the CSDDD and CSRD, following pressure from large member states and industry groups.

Opposition from civil society groups and some investors warns that narrowing the scope could weaken accountability for human rights and environmental abuses, especially in complex global supply chains.

Critics also warn that the weakened regulations might allow significant ESG risks to go unmonitored, undermining the EU's climate and human rights goals.

Despite scope reductions, companies will still be liable for damages caused by breaches of due diligence under national law, with fines up to 5% of global turnover, and enforcement guidance will be provided by the EU.

The final version of the law omits EU-wide provisions for holding companies accountable for human rights violations, significantly weakening enforcement mechanisms.

The removal of civil liability from the CSDDD is a major point of dissent, as critics believe it will hinder victims' access to justice.

The revised directives will now focus on large firms with over 5,000 employees and €1.5 billion in revenue, shifting to a risk-based approach rather than entity-based, to reduce compliance burdens.