EU Lawmakers Move to Dilute Corporate Sustainability Rules, Sparking Accountability Issues

Key Takeaways

The European Parliament has agreed to modify the Corporate Sustainability Due Diligence Directive (CSDDD), raising the thresholds for compliance.
Only companies with at least 5,000 employees and €1.5 billion in turnover will be required to monitor supply chain risks, up from 1,000 employees and €450 million.
The revision has sparked protests among lawmakers, who believe it undermines corporate accountability and weakens the EU’s commitment to sustainability.

Changes to the CSDDD

The European Parliament has recently reached a political agreement to amend the Corporate Sustainability Due Diligence Directive (CSDDD), significantly narrowing its scope. The revised proposal specifies that only companies with 5,000 or more employees and a minimum turnover of €1.5 billion will be obligated to track and manage human rights and environmental risks within their supply chains. This amendment marks a significant increase from the original thresholds of 1,000 employees and €450 million.

The changes stem from negotiations among various political factions in the European Parliament, including the centre-right European People’s Party (EPP), socialist, and liberal Renew groups. Influential member states, notably Germany and France, along with lobbying efforts from multinational corporations such as ExxonMobil, prompted the revisions. As a result, the law, which had been established in 2023 to hold large businesses accountable for mitigating environmental and social harm, faces dilution.

Reactions to the Amendment

The compromise has faced backlash from certain lawmakers. Dutch Socialist Lara Wolters resigned in protest, indicating that the changes diminish corporate accountability and could deter meaningful progress in ethical supply chain management. The newly agreed-upon text is set to be voted on by the European Parliament later this month before moving into discussions with EU member states.

Critics of the revised directive argue that it signals a broader retreat from Europe’s green and governance initiatives, as policymakers prioritize easing regulatory burdens on industries grappling with economic challenges. They express concerns that this shift will weaken corporate responsibility standards and undermine the EU’s objectives for ethical and sustainable supply chains, especially with the enforcement of the directive slated for 2027.

Overall, the recent amendments to the CSDDD highlight the ongoing tensions between regulatory ambitions and economic realities within Europe, raising critical questions about the future of corporate accountability in the region.

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