A European Parliament vote Tuesday will significantly reduce the number of companies that need to report sustainability data and related due diligence.
The vote means that only EU companies employing over 1,000 employees and with a net annual turnover of over €450 million will have to report sustainability data. The rules, pending formal approval by the Council of the EU, will also apply to non-EU companies with net turnover in the EU of over €450 million and to those companies’ subsidiaries and branches generating turnover higher than €200 million in the EU, according to a news release.
As recently as February, when Parliament voted to “stop the clock” on the EU’s Corporate Sustainability Reporting Directive (CSRD) reporting requirements for two years, companies with over 250 employees were to be subject to reporting if they had a net annual turnover of over €50 million or a balance sheet totaling over €25 million.
Tuesday’s vote also will reduce the threshold for companies to carry out due diligence on their negative impact on people and the planet, according to the release. Under the revised rules, due diligence will be required only from EU corporations with over 5,000 employees and a net annual turnover of over €1.5 billion and from non-EU companies above the same turnover threshold in the EU.
Earlier this month, the European Financial Reporting Advisory Group (EFRAG) finalised technical advice related to the European Sustainability Reporting Standards under CSRD that would reduce by 61% the data points that companies are mandated to report. The European Commission will consider EFRAG’s recommendations in 2026. EFRAG launched an ESRS Knowledge Hub to support companies, practitioners, and other stakeholders.
Jeremy Osborn, FCMA, CGMA, FCPA (Australia), global head of sustainability at the Association of International Certified Professional Accountants, welcomed the reduction in mandatory data points and a greater focus on the decision-usefulness of the information disclosed to stakeholders. He expressed concern, however, that raising the reporting threshold requirements to only the very largest companies will lead to fewer companies reporting under the ESRS than were reporting under the EU’s 2014 nonfinancial reporting directive.
AICPA and CIMA resource
The second cohort of the eight-week Sustainability Reporting and ESG Data Management Programme, the collaborative executive management programme offered by Oxford University’s Saïd Business School along with the AICPA and CIMA, is set to begin 21 January 2026. US-based practitioners can earn 27 continuing professional education credits for completion of the course.
“Accounting and finance professionals who complete this programme will have the necessary tools to lead their organisations in sustainability reporting, employ best practices in meeting compliance with evolving regulations, and will have a better ability to anticipate trends in this rapidly maturing area,” Osborn said.
— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.