At the Choose France summit on May 19, French President Emmanuel Macron called for the end of the Corporate Sustainability Due Diligence Directive. Macron echoed earlier statements by German Chancellor Friedrich Merz, encouraging the European Union to go beyond the current proposal to simplify the CSDDD to a complete rollback. If successful, it will prove to be a major setback for climate activists and human rights activists in the EU and globally.
Adopted in May 2024, the CSDDD created new legal liabilities for companies relating to the environment and human rights. The directive was poised to force companies to look beyond their internal policies and actions, but also to those of companies in their value chain. Companies face regulatory penalties and potential civil action from those who are adversely impacted by the companies actions. This opened the door for a form of class action lawsuit that could be brought by those seeking damages for climate change.
The final draft of the CSDDD initially appeared poised for easy approval. However, support quickly eroded, leading to 45 days of closed-door negotiations, false starts, and political pressure. Eventually, a watered down version of the final draft was renegotiated by the Council, then sent to the Parliament for approval.
The fight over the CSDDD was an indicator of a wider pushback on the EU Green Deal. During the European Parliament elections in July, the regulatory burdens on business played a significant role. The conservative European People’s Party ran a campaign that blamed many of the burdens on businesses on the green deal. It worked. The EPP gained seats. Environmentally friendly political parties did not fare as well. The Greens-European Free Alliance and Renew Europe both saw significant losses.
Action was swift. The Council proposed the Omnibus Simplification Package, a series of proposals to reduce the scope of the CSDDD and the Corporate Sustainability Reporting Directive. Additionally, the package included a stand alone bill to delay enaction of the CSDDD and CSRD. The idea was to delay while broader policy discussions occured, That proposal was fasttracked through the Parliament. Member states now have until the end of the year to transpose it into national law.
While the debate over broader reductions continues in the Parliament, national leaders are expressing their opinions. At the Choose France Summit on May 19, an annual international business summit hosted at Versailles, Macron used the opportunity to share his vision for the CSDDD with the business leaders in attendance.
In a video posted by AFP, Macron said in English, “We have to go fast and we have to do big if we want to be back in the race. For me, this is part of the top priority we have. First, simplification. We had first simplification… with this agenda, but clearly we are very aligned now with Chancellor Merz and other colleagues to go much faster. And CSDDD and some other regulations has not to just be postponed for one year, but put out of the table. I’m not even speaking about the content, I’m just speaking about how to synchronize with the U.S. and the rest of the world.”
The statement echoes broader concerns that the European Green Deal has placed the EU at an economic disadvantage by imposing overly burdensome regulations on businesses. Much to the frustration of sustainability advocates, this narrative will continue to fuel the debate over the CSRD, CSDDD, and other sustainability initiatives while the Omnibus Simplification Package is debated. Expect a final vote in the Parliament in late summer or early fall.
Read the full article here
