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The EU Parliament has voted to freeze sustainability regulations

The European Union gave itself more time on Thursday to negotiate changes that would exempt smaller companies from the sustainability reporting requirements, which European industry claims put them at a disadvantage.

In February, the European Commission proposed legal changes that it called "Simplification Omnibus", which would exempt thousands smaller European companies from EU sustainability reporting requirements.

The EU responded to the complaints of industry in Europe that it could not compete with its rivals from China and the United States where President Trump has rolled back regulations and imposed tariffs on imported goods.

Negotiations between the European Parliament, member states and the proposal can take up to a year. To avoid laws already agreed upon being implemented before the negotiations are concluded, the European Parliament voted Thursday to delay the reporting rules in place for most companies by two years.

Firms with less than 500 employees, and those larger companies that are not considered "public interest entities", will not be required to report their sustainability impact until 2027. Reports must then be submitted in 2028. The reporting requirements for most larger firms are due this year.

On Thursday, the Parliament agreed to postpone by an additional year the EU supply chain law. This policy will therefore not come into effect until 2028.

The EU countries have already approved the delays but will need to give their formal approval within the next few weeks. This final vote is just a formality and is expected to be passed.

Negotiations will begin then on the larger proposed changes to laws. The changes include excluding 80% of companies that were initially subject to the green reporting regulations by only applying the rules to companies with over 1,000 employees.

The EU wants to amend its due diligence laws so that companies must assess their supply chain for environmental and human right problems every five years instead of every year.

While the industry has backed the move to simplify, some investors, lawmakers on the left and activists have criticised the initiative. They said that the first round of omnibus proposals will undermine corporate accountability, and such rapid changes to laws recently agreed create an unstable environment. (Reporting and editing by Barbara Lewis; reporting by Kate Abnett)

(source: Reuters)