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EU Fight for Corporate Responsibility

Mar 5, 2025 | Article, Ethical Business Newsletters

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The EU Fight for Corporate Responsibility

The European Corporate Sustainability Due Diligence Directive: This is A Defining Moment for Corporate Accountability

(written by Sally Irwin March 2025)

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For years, the European Union (EU) has led global efforts in sustainability and human rights protection. Its ambitious Corporate Sustainability Due Diligence Directive (CSDDD) was designed to transform corporate accountability. Therefore it was ensuring that businesses operating within the EU take responsibility for human rights violations and environmental harm across their supply chains.

However, political maneuvering in early 2025 has threatened to significantly weaken the directive. As a result, this is raising concerns among human rights groups, environmental activists, and responsible businesses.

If passed in its diluted form, the directive could fail to hold corporations accountable, leaving vulnerable communities and ecosystems unprotected.

This white paper explores the original intent of the CSDDD. Including, the key proposed changes, and the potential consequences of weakening the directive. In addition, it also examines stakeholder reactions and the future of corporate responsibility in the EU and beyond.

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What is the Corporate Sustainability Due Diligence Directive?

The CSDDD is a landmark legislative proposal aimed at ensuring that corporations proactively identify, prevent, and address human rights violations and environmental harm in their business operations and supply chains.

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Key Goals of the EU Directive

1. Human Rights Protections

• Companies must assess risks related to forced labour, child labour, worker exploitation, and other human rights abuses.

• If violations are found, companies are required to remedy and prevent future occurrences.

2. Environmental Sustainability

• Businesses must evaluate their impact on deforestation, biodiversity loss, water pollution, and carbon emissions.

• The directive aligns with the EU Green Deal and the Paris Agreement to combat climate change.

3. Corporate Accountability

• Companies can be held legally responsible if they fail to conduct due diligence on their supply chains.

• Victims of corporate abuses can seek legal recourse in European courts.

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Who Would Be Affected by this in the EU and Globally?

The original version of the directive applied to:

• EU companies with over 500 employees and €150 million in revenue.

• Non-EU companies operating within the EU that meet similar thresholds.

• High-risk sectors (e.g., mining, textiles, agriculture) with at least 250 employees and €40 million in revenue.

This meant that thousands of corporations — including some of the world’s largest brands—would be held accountable for their supply chain practices.

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The Backlash: Why Are Some Governments and Corporations Opposing It?

Economic Concerns vs. Human Rights

Despite initial support, some EU member states — most notably Germany, France, and Italy — have backtracked on their commitment to the directive. Their primary concerns include:

• Regulatory Burdens: Because, businesses argue that compliance will be costly and complex, particularly for multinational corporations with vast supply chains.

• Competitiveness: For instance, some governments fear that stricter EU regulations will make European companies less competitive compared to businesses in regions with weaker laws.

• Legal Liability Risks: Finally, companies worry about facing lawsuits for human rights violations occurring deep within their supply chains, even if they were unaware of them.

Business lobbyists and trade groups have pressured policymakers to scale back the directive. Furthermore, they are warning of economic fallout if the regulations remain too strict.

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Proposed Weakening of the EU Directive

Under pressure, the EU Council has proposed several amendments that would significantly reduce the directive’s impact:

1. Fewer Companies Covered

Originally, the directive applied to companies with 500 employees and €150 million in revenue. Proposed changes could:

• Raise the threshold to 1,000 employees and €300 million in revenue. Therefore, fewer companies would be required to comply.

• Exempt many medium-sized companies, even in high-risk sectors.

2. Weakening Legal Liability

The initial directive allowed victims of human rights abuses to sue corporations for damages. The new proposals:

•Reduce companies’ direct legal responsibility, making it harder for victims to seek justice.

•Shift more responsibility onto suppliers, potentially allowing large corporations to escape accountability.

3. Cutting Environmental Commitments

Originally, companies were required to align their climate strategies with the Paris Agreement. New amendments may:

• Remove binding climate obligations, allowing companies to operate without strict environmental oversight.

• Reduce requirements for businesses to take action on deforestation and biodiversity loss.

These changes have sparked outrage among human rights groups, environmental activists, and ethical businesses.

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Why Weakening the EU Directive is Dangerous

A Setback for Human Rights

If the CSDDD is weakened, companies may continue to benefit from forced labour, child exploitation, and unsafe working conditions without facing real consequences. According to Walk Free (2025), millions of workers in developing nations are at risk of being exploited within global supply chains.

Without legal enforcement, corporations will have less incentive to prevent abuses — leaving vulnerable workers without protection.

 

Environmental Consequences

A watered-down directive could also undermine global climate action. Many businesses have pledged net-zero targets, but without regulatory pressure, some may fail to follow through.

Weakening environmental due diligence means:

• More deforestation for agriculture and mining operations.

• Higher carbon emissions from unsustainable supply chains.

• Greater pollution affecting communities in resource-rich regions.

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Mary Robinson, Former UN High Commissioner for Human Rights

In February 2025, Mary Robinson, who served as UN High Commissioner for Human Rights from 1997 to 2002 and as former President of Ireland, issued a strong statement condemning the European Commission’s proposed changes. She stated:

“Von der Leyen’s new Commission’s attempt to eviscerate these sustainability laws must not be agreed by the European Parliament and by the member states.” REF

This forceful statement from such a prominent human rights figure demonstrates the serious concerns about the potential weakening of the directive. As a highly respected global leader, Robinson’s condemnation carries significant weight in international human rights and business communities.

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Corporate Responsibility is on the Line

A weak directive could set a dangerous precedent — if the EU fails to enforce corporate sustainability, other major economies (such as the U.S., UK, and Australia) may also delay or weaken their own regulations. This could slow down global progress on corporate responsibility.

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Phil Bloomer, Executive Director of the Business & Human Rights Resource Centre

Also in February 2025, Phil Bloomer, who leads one of the most respected organizations tracking corporate human rights impacts globally, provided a comprehensive critique of the Omnibus package:

“The EU’s sustainable finance framework has been a beacon of long-term competitiveness and responsible governance. Yet, at a time when climate and inequality crises demand bold leadership, instead of strengthening these vital protections, the Commission is bowing to irresponsible business lobbies and rolling back progress under the guise of simplification. The proposed weakening of the Corporate Sustainability Due Diligence Directive (CSDDD) and other sustainability laws is not just a bureaucratic adjustment – it is reckless deregulation which undermines trust, legal certainty, and Europe’s global leadership.“REF

Bloomer’s detailed assessment highlights both the economic and human rights implications of the proposed changes. As a result, it offers a business-focused perspective on why the rollback is problematic.

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The Role of Stakeholders in Defending the Directive

Civil Society and Activists Speak Out

Many human rights organisations, NGOs, and environmental groups strongly oppose the dilution of the CSDDD. Therefore, Walk Free (2025) and other advocacy groups have called on EU lawmakers to:

• Maintain strict due diligence obligations to ensure businesses take responsibility for human rights and sustainability.

• Keep strong liability measures so victims of corporate harm can seek justice.

• Enforce environmental commitments to align with the EU’s broader climate goals.

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Ethical Businesses Support Stronger Regulation

Not all businesses oppose the directive. Many responsible corporations, including The Freedom Hub, recognise that strong sustainability laws:

• Create a level playing field by holding all businesses to the same standards.

• Boost consumer trust—modern consumers increasingly demand ethical and sustainable products.

• Reduce long-term business risks associated with supply chain scandals and climate-related disruptions.

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Will this impact Australian Business?

Although the CSDDD is an EU regulation, its effects could extend far beyond Europe. As a result it will impact Australian businesses that trade with or operate in the EU. For example, many Australian mining, agriculture, textiles, and retail companies have supply chain links to Europe, meaning they could be subject to stricter due diligence requirements if the directive is enforced in its original form. However, if the directive is weakened, Australian exporters may face less regulatory pressure and risk falling behind global sustainability standards. Additionally, if the EU maintains strong enforcement, Australian businesses will need to improve transparency, invest in sustainable sourcing, and enhance labour rights protections to maintain access to the European market. In the long term, this could push Australian policymakers to adopt similar corporate responsibility laws, aligning the country with global trends in ethical business practices.

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“When The Freedom Hub started advocacy of human rights in business in 2013 ‘modern slavery’ was a dirty word and human rights in business was not given much thought. No company wanted to have anything to do with slavery for fear of reputational damage. It has been a joy to see the world changing, becoming more transparent and working together for the greater good of people and planet. I believe most people still want these values and businesses need to take note. It is up to ALL of us to rise up and fight for these values in our own patch of this globe, despite media and political trends”   Sally Irwin – Founder.

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Conclusion: A Defining Moment for Europe’s Commitment to Sustainability

The Corporate Sustainability Due Diligence Directive represents a crucial opportunity for the EU to lead the world in corporate accountability. However, ongoing political debates and corporate pressure risk turning it into a watered-down law with limited impact.

If the directive is weakened, the burden will shift to consumers, investors, and activists to hold companies accountable. Public pressure and advocacy will be essential in ensuring that human rights and sustainability remain at the heart of European business policies.

The EU has a historic opportunity to create real change. Now, it must decide whether to stand by its principles—or bow to corporate interests at the cost of human rights and environmental protection.

 

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