Concerns about sluggish European growth have shifted the bloc's focus to competitiveness and away from the climate change push of EU chief Ursula von der Leyen's first term -- to the alarm of green advocates.

The European Commission in February proposed postponing two sets of rules as step one in a sweeping "simplification" package aimed at cutting red tape and giving businesses more breathing room.

The first text, called the Corporate Sustainability Reporting Directive (CSRD), requires large firms to give investors and other "stakeholders" information on their climate impacts and emissions, and steps taken to limit them.

The second is the Corporate Sustainability Due Diligence Directive (CSDDD), which demands that large companies fix the "adverse human rights and environmental impacts" of their supply chains worldwide.

Under the so-called stop-the-clock proposal approved with an overwhelming majority by lawmakers on Thursday, the implementation of both sets of rules is to be delayed to help companies better prepare.

Member states had greenlit the delay last month.

Companies required to comply with the CSRD as of 2026 and 2027 will now have until 2028 to do so, while larger firms would get a one-year reprieve on initial implementation of the CSDDD.

Beyond that, the commission is proposing more fundamental changes to both directives.

It wants CSRD rules to apply only to 10,000 larger companies rather than the initial 50,000, effectively sparing 80 percent of the firms originally targeted.

And it proposes scaling back the CSDDD's requirements to have companies assess the impact only of their direct suppliers -- rather than their full value chain -- and every five years as opposed to annually.

Those changes are still up for negotiation however, and face a tough ride in parliament where left-wing and green lawmakers strongly oppose weakening EU environmental rules.

The Green Deal, the EU's ambitious climate plan setting the bloc on a path to become carbon-neutral by 2050, dominated von der Leyen's first term.

But the bloc's environmental agenda has been largely eclipsed by the issue of competitiveness -- all the more so as US President Donald Trump pursues an aggressive tariffs policy that is pushing Europe and the United States towards a trade war.