Europe is rolling back key corporate responsibility laws — and we will all pay the price

You shouldn't have to choose between products whose production harms people and the planet, and products that are environmentally-friendly and safe. It's companies’ responsibility - and the Corporate Sustainability Due Diligence Directive (CSDDD or CS3D for the insiders) could help make sure they own up to it.

Yet, the European Union has just taken a major step backwards on corporate sustainability. 

In December 2025, the European Parliament rubberstamped a political agreement that significantly weakens the CSDDD through the so-called Omnibus I “Simplification” package.  

This corporate responsibility law was designed to ensure companies respect human rights, tackle environmental harm, and prevent biodiversity loss and forced or child labour across their supply chains. Its dilution will have far-reaching consequences — not just for people and the planet, but also for responsible businesses, legal certainty, and Europe’s economic resilience. 

How did the Corporate Sustainability Due Diligence Directive get weakened? 

The weakened text of the CSDDD was pushed through fast-tracked trilogue negotiations, approved by Member States, endorsed by the European Parliament’s Legal Affairs Committee, and formally adopted by Parliament in plenary. This was made possible by a parliamentary alliance led by the European People’s Party (EPP) and supported by far-right groups. 

The legislative process itself raised serious concerns. The proposal was rushed, lacked proper evidence, and was marred by maladministration — as confirmed by the European Ombudswoman. Decision-making occurred under intense political pressure and lobbying, including from foreign corporate interests, undermining democratic standards and trust in EU lawmaking. 

Why do supply chain laws like the CSDDD matter? 

Supply chain laws exist for a simple reason: without clear rules, companies can profit from environmental destruction and human rights abuses across their value chains while externalising costs to communities, ecosystems, and taxpayers. 

Weakening these laws means products sold in Europe could be linked to deforestation, exploitation of workers, or severe pollution — without meaningful accountability for it. It rewards laggard companies that delay action while penalising those that have already invested in cleaner supply chains. 

Far from simplifying life for business, rolling back sustainability rules creates legal uncertainty, fragments the internal market, and makes long-term planning harder — especially for responsible companies that rely on clear, predictable standards. 

What has been stripped from the Corporate Sustainability Due Diligence Directive? 

1. Scope drastically reduced 
The Directive now applies only to companies with more than 5,000 employees and a net worldwide turnover of €1.5 billion, including foreign companies meeting the same turnover threshold in the EU. This represents a 70% reduction compared to the Commission’s original proposal, leaving out thousands of companies whose activities cause serious human rights and environmental harm. A review clause allows for possible extension by 2031, signalling lawmakers’ own doubts about the narrowed scope. 

2. Mandatory climate transition plans deleted 
This is arguably the most damaging change. Removing this obligation undermines the EU’s ability to meet legally binding climate targets and weakens the Directive’s capacity to align corporate conduct with climate science. It also contradicts states’ international obligations on climate due diligence, increasing legal risks for both the EU and its Member States. 

3. Civil liability fragmented 
The deletion of EU-wide harmonisation on civil liability restricts access to justice for victims while exposing companies to divergent national rules. This increases uncertainty and undermines the level playing field across the Single Market. 

The due diligence framework still requires companies to identify and address risks across their entire value chain, but unjustified delays mean transposition will only occur in 2028, with full application in 2029. 

A broader picture of regulatory rollback beyond supply chains 

Supporters of Omnibus I claim the rollbacks are needed to boost competitiveness. Yet many businesses themselves – including Nestlé, Unilever and L’Oréal - warned against reopening or weakening these laws. What companies need is clarity, stability, and a fair market, not deregulation. 

This “simplification” risks creating a regulatory Wild West: fragmented rules, legal uncertainty, and weaker protections for people and nature. It forms part of a broader political trend to dismantle environmental safeguards under the false narrative that they harm Europe’s economy — when in reality, environmental breakdown is the far greater threat. 

What happens next with the CSDDD? 

The text will have to be formally approved by Council.  

Member States will then have a pivotal role to play in making sure that companies are still held accountable for their human rights and environmental impacts. Transposition into national law offers an opportunity to close gaps, strengthen enforcement, and ensure human rights and environmental protections meet international standards. 

Today’s decisions risk emboldening harmful business practices and delaying action where it is most urgently needed. ClientEarth will continue to scrutinise Omnibus I and push for meaningful, enforceable standards that protect people, nature, and the foundations of Europe’s economy. 

Weakening supply chain laws will not make problems disappear. What it will do is shift the costs onto citizens, communities, and future generations.