EU Faces Backlash Over Potential Rollback of Corporate Due-Diligence Rules

Concern Over Reversal of Key EU Supply Chain Legislation
A potential rollback of the EU’s Corporate Supply Chain Due Diligence Directive (CSDDD) is stirring significant concern among center-left members of the European Parliament (MEPs). The CSDDD, which mandates companies to monitor their supply chains for human rights and environmental risks, narrowly passed earlier this year after considerable compromises. Now, the prospect of revisiting and potentially watering down the directive is raising alarms within the socialist factions of the Parliament, who argue that such a move would undermine the EU’s green agenda and erode legal certainty for businesses.

CSDDD: Protecting Workers and the Environment in Global Supply Chains
The CSDDD is a key piece of legislation designed to hold companies accountable for their supply chains, aiming to prevent disasters like the 2013 Rana Plaza collapse in Bangladesh, where over 1,100 workers died. The law requires businesses to actively check for human rights violations and environmental risks in their operations and those of their suppliers. While the directive faced strong resistance from countries like Germany and Italy, who were concerned about its impact on competitiveness, it passed through the legislative process in a diluted form.

Shift to the Right and Economic Pressures Prompt Push for Reconsideration
The shift to a more right-wing European Parliament after the June elections, combined with Europe’s ongoing economic challenges, has prompted some lawmakers to consider revisiting green regulations like the CSDDD. As Europe struggles with economic stagnation, policymakers are increasingly focusing on boosting economic growth, with some advocating for simplifying or relaxing green laws to alleviate the regulatory burden on businesses.

Socialist and Democratic Groups Oppose Potential Changes
The Socialists and Democrats, the second-largest political group in the European Parliament, have voiced strong opposition to any changes to the CSDDD. A letter from key members of the group, including Iratxe García Pérez, Ana Catarina Mendes, and René Repasi, calls on President Ursula von der Leyen to exclude the CSDDD from the upcoming “simplification” package. These MEPs warn that revising the law would undermine public trust in the EU’s commitment to green policies and hinder efforts to enforce corporate accountability. The letter stresses that any simplification must not amount to deregulation, particularly given that MEPs’ support for von der Leyen’s second term was based on assurances that the substantive elements of EU legislation would remain intact.

Business Lobby Groups Push for Streamlining Green Regulations
In contrast, business lobby groups such as Eurochambres have expressed support for von der Leyen’s proposal to streamline the EU’s green regulations. They argue that the complex and uncoordinated implementation of environmental laws like the CSDDD and the Corporate Sustainability Reporting Directive (CSRD) is creating a significant burden for businesses. These groups contend that the lack of coordination among different regulations has a non-negligible impact on business operations and competitiveness, particularly at a time when the EU is struggling to maintain economic momentum amid strong competition from other regions, notably the US and China.

Delays in Other Green Regulations, Including Anti-Deforestation Law
In addition to the CSDDD, the EU is also facing delays in implementing its anti-deforestation law, which aims to prevent the importation of goods such as soy, beef, and coffee that contribute to deforestation. The law has been delayed for an additional year due to challenges in coordination with major exporting countries like Brazil, Indonesia, and West Africa. This delay further highlights the difficulties the EU faces in balancing environmental goals with global trade realities.