The European Parliament backed a position that sets compliance only for companies with at least 5 000 employees and annual turnover above €1.5 billion, reversing earlier thresholds of 1 000 employees and €450 million turnover. The requirement for firms to prepare climate transition plans was removed altogether. Lawmakers approved the package in a vote with 382 in favour and 249 opposed. Ahead of the vote an alliance of centre-right and far-right groups co-operated to secure changes, thereby deviating from the traditional bloc alignments in the Parliament. This move came after firms and governments, including the United States and Qatar, warned that the original directive would impede investment and supply-chain operations in the bloc. Critics warn the amendments may undermine corporate accountability for human-rights and environmental risks across supply chains. Some civil-society organisations argue that by narrowing the number of covered firms and removing key obligations the legislation loses much of its intended bite.  Supporters say the changes relieve smaller firms from compliance burdens and position the bloc to be more competitive globally, easing regulatory costs and complexity. The diplomatic dimension of the vote is significant. Businesses in the United States and other jurisdictions had lobbied for the roll-back on the grounds that strict EU sustainability rules would disadvantage non-EU operators and hamper global trade. For the Parliament, delivering a business-friendly outcome may also reflect strategic recalibration given economic pressure on member states and industry concerns about regulatory load. The legislation now moves into trilogue negotiations between the European Parliament, the European Commission and the Council of the European Union (with member-state governments). Final text approval remains subject to formal adoption by member-states, likely by end of the year. Industry and legal watchers will closely monitor whether the thresholds or obligations change again in the negotiations or if short-form compromises persist. The shift raises questions about the bloc’s broader climate and human-rights strategy. With the Corporate Sustainability Reporting Directive and the CSDDD both facing revision, the EU must weigh regulatory simplification against its commitments under the European Green Deal and global investor expectations. Observers note that higher thresholds mean the majority of firms initially captured will now fall outside the rules, which could impact transparency and oversight. In member-state capitals the political significance of the vote is already clear. Governments facing economic headwinds may interpret the change as a sign that Brussels will pivot toward regulatory light-touch models for industry. Firms headquartered in smaller EU countries or operating cross-border welcomed relief from obligations they viewed as onerous. Legal experts, however, warn that reducing due-diligence obligations may invite litigation under national frameworks and create patch-work compliance risks. As trilogue talks advance the key question will be whether the Council pushes for restoring some of the tougher elements removed by Parliament or accepts the business-friendly baseline. A diluted final law could still pass, but the durability of the changes and their downstream effects on supply-chain governance, investor behaviour and global standards remain uncertain. In sum the vote marks a recalibration of Europe’s regulatory ambitions on sustainability. It signals a stronger tilt toward business competitiveness over ESG rigour and suggests that corporate obligations may be slimmer than previously envisioned. The consequences for global corporate operations, as well as the EU’s leadership role in sustainable governance, are likely to unfold over the coming years....