European Parliament Rejects Compromise on Simplifying EU Sustainability Rules

The European Parliament recently rejected a controversial compromise aimed at simplifying the EU's sustainability and due diligence regulations, sending the Omnibus I initiative back to negotiations and delaying final talks with member states. The proposed changes included raising employee thresholds for corporate sustainability reporting and limiting due diligence requirements to direct business partners, which some lawmakers felt weakened the regulations intended to hold companies accountable for human rights violations in their supply chains. This rejection, narrowly decided by secret ballot, highlighted divisions within parliamentary groups, with some members opposing the compromise despite prior informal coalitions. Meanwhile, a majority of EU countries, including Germany and France, have called for dismantling outdated rules to enhance competitiveness, emphasizing the need to balance simplification with maintaining policy goals. The European People’s Party, which led the compromise, faced setbacks as other parties, including the Greens and some Social Democrats, pushed for stronger sustainability frameworks rather than reduced regulations. The vote is seen as a victory for those advocating for robust environmental and human rights standards, though it has introduced uncertainty for businesses awaiting clear regulatory guidance.