*

Lawmaker groups agree to further weaken corporate

sustainability

law

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Deal would apply law to firms with at least 5,000

employees, 1.5

billion euros turnover

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Socialists compromise to avoid 'worse' deal with far-right

lawmakers

By Kate Abnett

BRUSSELS, Oct 8 (Reuters) - Lawmaker groups holding a

majority in the European Parliament agreed a deal late on

Wednesday to make deeper cuts to the EU's corporate

sustainability law, lawmakers and officials told Reuters.

The European Union's corporate sustainability due diligence

directive (CSDDD) was adopted last year and requires companies

to fix human rights and environmental issues within their supply

chains, or face fines of 5% of global turnover.

It has become one of the most politically contested parts of

Europe's green agenda, and Brussels is now negotiating changes

to simplify the rules for European companies, after pushback

from Germany and France - as well as the United States and

Qatar, and companies including Exxon Mobil ( XOM ).

The centre-right European People's Party group - the biggest

lawmaker group in the European Parliament - on Wednesday struck

a deal with socialist and liberal lawmakers to pare back the law

further, Jorgen Warborn, the EPP lawmaker leading the

negotiations, told Reuters.

A key change would be to only apply the rules to companies

with 5,000 or more employees and at least 1.5 billion euros

($1.74 billion) in turnover, he said. Currently, CSDDD covers

companies with 1,000 or more employees and above 450 million

euros in turnover.

"I'm focusing on making sure that we put Europe back to

growth, so that we can produce more jobs and more long-term

prosperity," Warborn said.

Brussels has argued changes are needed to avoid

overburdening companies with complex reporting requirements

before the law is scheduled to apply in 2027. But campaigners

and some companies have warned the EU risks gutting corporate

accountability.

Socialist lawmakers had initially balked at the plans, but

on Wednesday said they had agreed after the EPP threatened to

strike a deal with far-right lawmakers instead, and weaken the

law further.

"This compromise is not our preferred option but the

alternative was a worse EPP agreement with the far right," a

spokesperson for the Socialists and Democrats group said.

Dutch Socialist lawmaker Lara Wolters said she had resigned

as the group's negotiator on Wednesday in response.

An official from the liberal Renew group confirmed it had

also backed the deal. Together, the three lawmaker groups hold a

majority of seats in the EU Parliament.

The EU Parliament will vote on the deal later this month,

before negotiating the final changes to the law with EU

countries.

($1 = 0.8601 euros)

(Reporting by Kate Abnett; Editing by Lincoln Feast.)