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European Parliament Backs 90% by 2040, Narrows Corporate Sustainability Rules

Parliament’s vote sets up negotiations with EU governments next week on a tougher climate pathway paired with reduced reporting and due‑diligence coverage for companies.

Overview

  • MEPs adopted a negotiating mandate for a binding 90% net greenhouse gas cut by 2040 versus 1990 levels, passing 379–248 with 10 abstentions.
  • Parliament endorsed flexibilities including use of up to five percentage points of high‑quality international carbon credits from 2036, biennial progress reviews, and a one‑year delay of ETS2 to 2028.
  • In a separate vote on the Omnibus I package, MEPs raised thresholds that limit which firms must comply with sustainability rules, lifting CSDDD scope to companies with over 5,000 employees and €1.5 billion turnover and tightening CSRD to firms with more than 1,750 employees and €450 million turnover.
  • A new majority formed as the EPP aligned with ECR and right‑wing groups to pass the package and elements of the climate position, sidelining the previous centrist coalition.
  • Interinstitutional talks with member states begin 18 November, and NGOs and legal experts have signaled potential challenges at the EU Court of Justice to contest the omnibus approach.