Lawmakers move to weaken Europe’s corporate sustainability due diligence directive

The European Parliament’s legal committee has voted to significantly weaken the Corporate Sustainability Due Diligence Directive (CSDDD).

The CSDDD is designed to hold companies accountable for human rights and environmental harms across global supply chains.

Under new proposals adopted this week, the directive would only apply to companies with 5,000 or more employees and €1.5 billion in turnover.

This is a major step back from the existing thresholds of 1,000 employees and €450 million turnover.

It dramatically reduces the number of companies that need to identify and address modern slavery, forced labour, and environmental damage in their operations and supply chains.

Lawmakers also voted to remove the obligation for companies to prepare climate transition plans, which is a key measure to align business activities with the EU’s climate and human rights commitments.

As widely expected, the legal committee also voted to reject an EU-wide civil liability regime. This will vastly increase the difficulty for victims to hold companies to account.

The proposed rollback follows pressure from some European industries and political groups seeking to cut costs for businesses and simplify compliance.

However, these changes undermine years of progress towards corporate accountability and weaken the EU’s leadership on responsible business conduct.

Civil society groups, investors, and legal experts have warned that these cuts would strip the directive of its purpose to prevent and remedy exploitation and environmental harm throughout supply chains.

If adopted, this version could exclude thousands of companies linked to high-risk sectors such as agriculture, textiles, and renewable energy, leaving major gaps in due diligence coverage and exposing more workers to abuse.

Many countries currently considering introducing a due diligence obligation, including Australia, Thailand and Indonesia, are closely watching developments in the EU. The ongoing debate and uncertainty risks not only progress in Europe, but globally.

The legal committee’s vote allows negotiations to begin between the European Parliament and EU member states. However, a full parliamentary vote could still be requested in the coming weeks.

Several governments, including France and Germany, have already expressed support for narrowing the directive’s scope, citing concerns about competitiveness.

Meanwhile, international lobbying from countries such as the United States and Qatar has added further pressure to limit the directive’s reach over foreign companies.

Despite these challenges, many lawmakers, investors, and advocacy organisations continue to urge the EU to uphold a strong and effective CSDDD that protects people and the planet, rather than prioritising short-term political or economic gains.

As negotiations continue, Walk Free calls on EU leaders to maintain the directive’s ambition and ensure all companies operating in Europe are required to respect human rights and uphold environmental standards across their supply chains.