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

A Step Backwards? Debate Reignites Over Supply Chain Law

The European Union is facing a political backlash over talks of rolling back its Corporate Sustainability Due Diligence Directive (CSDDD) — a law that aims to make companies responsible for human rights and environmental abuses in their global supply chains.

The directive narrowly passed earlier this year after intense negotiations and political compromise. But now, with the European Parliament tilting more to the right after the June elections, the idea of softening the rules is back on the table. That’s not sitting well with center-left lawmakers, who argue that dialing down the law would harm both the EU’s climate goals and legal clarity for businesses.

What Is the CSDDD and Why Does It Matter?

The CSDDD is essentially a guardrail for ethical business. Inspired in part by tragedies like the 2013 Rana Plaza factory collapse in Bangladesh, the law requires European companies to audit their supply chains and take action against labor abuses and environmental violations.

While it faced pushback from some member states — particularly Germany and Italy — over concerns about economic competitiveness, the law ultimately made it through the EU’s legislative maze, though in a diluted form.

Economic Slowdown Fuels Political Recalibration

But Europe’s ongoing economic sluggishness is prompting some lawmakers to rethink green regulations. With businesses struggling and voters feeling the pinch, calls are growing for simplification — or in some cases, deregulation — of environmental and social mandates.

Critics of the rollback, however, see this as short-term thinking. They warn that weakening corporate accountability rules not only puts workers and the environment at risk but also damages Europe’s credibility as a global leader in sustainable policy.

Center-Left Pushes Back Against ‘Simplification’

The Socialists and Democrats — the second-largest political group in the European Parliament — are pushing back. In a letter to European Commission President Ursula von der Leyen, top MEPs like Iratxe García Pérez and Ana Catarina Mendes urged her not to include the CSDDD in any regulatory “simplification” efforts.

They argue that simplifying the law shouldn’t mean watering it down. They also reminded von der Leyen that many MEPs backed her second term on the condition that core EU laws, like the CSDDD, wouldn’t be dismantled under the guise of reform.

For now, the future of the directive hangs in the balance — a symbol of the broader tug-of-war between economic pragmatism and sustainable responsibility in the EU.