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The EU has introduced a draft proposal to revise eight key provisions of its Corporate Sustainability Due Diligence Directive (CSDDD). The proposed amendments cover a broad spectrum, including easing corporate responsibilities for monitoring potential ESG violations within supply chains and lowering the scale of possible penalties, Bloomberg reported.
The move follows intense pressure on the bloc – both from within Europe and beyond – to rein in a piece of legislation whose early design was intended to expose companies to legal liability if they failed to purge their value chains of ESG violations. Companies in the EU have warned that complying with the CSDDD will make it harder to compete with the US and Asia. In France, officials have gone so far as to ask that the CSDDD be shelved.
In the US, the newly appointed Commerce Secretary, Howard Lutnick, informed Republican senators in January 2025 that he was open to exploring the use of ‘trade tools’ to shield American businesses operating in the EU market from having to adhere to the CSDDD requirements.
The European Commission is set to present its proposal for the omnibus legislation on 26 February. In addition to addressing the CSDDD, the initiative will explore options to streamline the EU’s Corporate Sustainability Reporting Directive and its Taxonomy Regulation.
The proposal has already faced backlash from civil society organisations, which have been calling on the EU to uphold the directive’s original principles.
Maria van der Heide, head of EU policy at the non-profit ShareAction, criticised the proposed rollback as ‘irresponsible’. She warned that essential sustainability laws aimed at addressing critical issues – such as climate change, human rights violations, and corporate exploitation – are being dismantled hastily and without transparency. ‘This isn’t simplification; it’s outright deregulation’, she stated.
In an interview last month, Maria Luis Albuquerque, the EU’s financial services commissioner, indicated that, while there is scope for refining ESG regulations, this should not be seen as a step towards full deregulation. The focus, she explained, is on ‘adjusting the pace’ without ‘losing the anchor’.