Despite promises made in her inaugural speech, von der Leyen has abandoned the sustainability agenda. Successfully pushed by the Draghi report and the pervading narrative of ‘the EU lagging behind’, the President of the Commission decided that previous commitments must be abandoned for the sake of competitiveness. It’s a move welcomed by business lobbies, but bad news for the millions of workers in the Global South who indirectly sustain European economies. EU member states still have the power to stop this betrayal.
In February, the Commission published the “Omnibus” package aiming to cut red tape for businesses to “regain competitiveness and unleash growth” in the EU. This package effectively guts responsible business regulations, including the Corporate Sustainability Due Diligence Directive (CSDDD). Proposed amendments reduce companies’ obligations to a token level, effectively absolving them of responsibility for their value chains. They are based on unsubstantiated arguments – mere slogans that collapse under scrutiny. As a result, the “Omnibus” enables continued profit from human rights abuses and environmental destruction.
The original CSDDD requires the largest EU companies to ensure that their activities are not linked to environmental harm and human rights violations and to develop climate transition plans meeting EU targets. All of that to prevent European companies from, for example, profiting from child labor in Congo while claiming ignorance or polluting rivers in India while blaming subcontractors.
Even in its original form, the directive was full of compromises and too weak to fully curb human rights abuses by corporations within their value chains. However, von der Leyen’s proposal will strip it of any remaining significance.
The Omnibus would limit due diligence procedures to direct suppliers, meaning that all that companies would need to do to bypass the law is to add one intermediary to their supply chain. To ensure a free pass for business, the Omnibus removes the obligation to terminate commercial relationships with partners causing adverse impacts and weakening civil liability standards. Meanwhile, victims – such as a woman from Ghana facing off against the world’s largest corporations, backed by armies of lawyers – will be left entirely on their own, as the proposal removes the option for victims to seek legal assistance from NGOs. While companies will technically still have to adopt climate transition plans, there will be no way to control their implementation – a piece of paper shoved into a drawer will be enough to meet the requirement.
One might assume that some EU countries will want to maintain higher standards for corporate accountability, right? Not on the Commission’s watch! The proposal introduces a maximum harmonization clause, preventing member states from setting stricter rules.
All of this, of course, in the name of competitiveness.
Business lobbies push for gutting the original directive claiming that it was introduced suddenly, is extremely costly, imposes overly excessive requirements, and because European companies are not involved in human rights violations anyway. But the directive did not fall from the sky. Proposed in early 2022 (after prior debates) and adopted in mid-2024, it won’t be fully implemented until 2027–2029. The first companies subject to its obligations were given three years to prepare. Is that really too short for our supposedly “agile” enterprises?
Regarding costs, the Commission claims that the proposed changes could lead to EUR 320 million in total compliance cost savings per year. However, this figure is merely a cost analysis, not a cost-benefit calculation or even an impact assessment. Moreover, the huge compliance costs amount to just 0.13% of the total dividends paid out to shareholders in 2023. Not profits – dividends.
But what’s even more striking is that many companies already report compliance with even stricter standards than those now deemed “excessive” and “too complex”. In a nutshell, under the EU Taxonomy, companies must report whether they operate following the OECD Guidelines and the UN Guiding Principles. Both set stricter expectations than those outlined in the CSDDD. Schrödinger’s compliance: the same companies that allegedly already meet even stricter sustainability requirements will struggle with milder guidelines stemming from the CSDDD. Do these companies not understand what they report, or are they feigning compliance with invoked guidelines in the first place?
We need this directive because even European companies are involved in human rights violations. This is evidenced, for example, by Decathlon benefiting from Uyghur forced labor or Heinz-Glas fighting collective bargaining in Peru. Our companies need binding legal rules too.
The Omnibus lacks any real justification and shows a complete capitulation to corporate lobbying. Currently, the Commission has submitted the package to the European Parliament and the Council for their consideration and adoption. It means that they still have the power to push back – either by rejecting the worst elements of the proposal or scrapping it altogether.
They should do so.
The real question is whether they will choose the easy path of deregulation or continue to fight for human rights worldwide. After all, with Trump’s retreat from the international norms order, the EU’s values-based leadership becomes more crucial than ever – as a source of Europe‘s soft power and an influential global moral compass.
