EU lawmakers ease corporate sustainability law sparking accountability anxieties

The European Parliament’s legal committee has agreed to further weaken the EU’s Corporate Sustainability Due Diligence Directive (CSDDD). The committee qualified the decision as a way to increase competitiveness in European industries. This is the latest move in a broader campaign to simplify Europe’s green regulations, but it encountered criticism of “gutting” the effectiveness of the law.

In contrast, personal care companies are heading in the opposite direction, increasing their personal sustainability directives and working toward more ethical supply chains. 

Adopted last year, the CSDDD requires companies to address human rights and environmental issues in their supply chains or face fines of up to 5% of global turnover.

The CSDDD currently applies to companies with at least 1,000 employees and over €450 million (US$519.9 million) in turnover. However, the committee’s lawmakers have now approved proposals that would make the rules mandatory for larger companies only — with 5,000 or more employees and at least €1.5 billion (US$1.73 billion) in turnover.

The decision also backs dropping the requirement for companies to carry out transition plans. This means that companies will no longer be obligated to outline how they will move toward better sustainability practices, particularly concerning ethical human and environmental practices.

The CSDDD requires companies to address human rights and environmental issues in their supply chains or face fines.Easing or omitting these requirements would make complying with the directive less burdensome for businesses, but it could also lower company accountability.

Business flourishment or facade

The CSDDD is one of the most politically contested parts of Europe’s green agenda. The new announcement follows pressure from countries such as the US and Qatar, which have demanded changes to the directive. They contend that the EU is overreaching by imposing requirements on foreign companies.

In May, Qatari Energy Minister Saad al-Kaabi wrote to the Belgian government about the CSDDD. The letter read: “Put simply, if further changes are not made to CSDDD, the State of Qatar and QatarEnergy will have no choice but to seriously consider alternative markets outside of the EU for our liquefied natural gas and other products, which offer a more stable and welcoming business environment.”

In a press release last Friday, the European Commission (EC) said the decision to dilute the CSDDD was to “cut red tape.”

“Existing sustainability reporting and due diligence rules are being simplified. The aim is to ease reporting requirements and cut social and environmental obligations for companies.”

The legal committee has asked the European Parliament to begin negotiations on the final rules with EU countries, without holding a full vote in the assembly. A group of lawmakers representing one-tenth of the assembly could call for a vote as early as next week.

Some countries have vocalized support for changing the law to only apply to companies of 5,000 or more employees.

On the other side of the debate, organizations such as WWF and ClientEarth have said the rollback will hinder Europe’s ability to meet climate goals and weaken corporate accountability.

Mariana Ferreira, sustainability policy officer at WWF European Policy Office, reacted to the decision: “This will severely gut the effectiveness of the law by undermining victims’ access to justice, eliminating enforcement, and turning corporate due diligence into a toothless box-ticking exercise.”

“The EU cannot afford to continue diluting its climate and nature commitments when faced with mounting ecological and social crises, which in turn are increasingly damaging European livelihoods, economy, and cohesion.” 

Senior lawyer Amandine Van den Berghe of nonprofit law firm ClientEarth adds: “If such changes are ultimately adopted, this law will be stripped of its very purpose for short-term political convenience. What is a cornerstone of responsible business in Europe is being turned into a political bargaining chip.”Organizations have said the rollback will hinder Europe’s ability to meet climate goals and weaken corporate accountability. 

Ethical oversight

The CSDDD entered into force in July 2024. In its own words, the EC said it aimed to “foster sustainable and responsible corporate behavior in companies’ operations and across their global value chains.”

“The new rules will ensure that companies in scope identify and address adverse human rights and environmental impacts of their actions inside and outside Europe.”

Beauty companies have been adopting these moral practices at increasing levels, driven by regulation and consumer demand. They commit themselves to more ethical supply chains, both environmentally and humanely.

The Global Shea Alliance (GSA), EOS Products, and nonprofit Water for West Africa recently partnered to empower women shea processors in Northern Ghana and Côte d’Ivoire. The initiative works to improve access to clean water, quality infrastructure, sustainable livelihoods, and equitable value chains.

“This partnership reflects a growing awareness that sustainability is not just about products — it’s about people. The women who produce shea are not beneficiaries. They are leaders in restoration, enterprise, and community development. It’s time they were recognized and supported as such,” Aaron Adu, managing director of the GSA, told Personal Care Insights.

Univar Solutions and TriNutra also previously told us that today’s beauty consumers want high-performing products from transparent companies that align with their values.

“Deregulatory” debates

This summer, the EU’s green, ethical, and safety enforcements have experienced delays, revisions, or cut-backs. 

In July of this year, a breakdown in trilogue negotiations caused confusion over whether the EU Green Claims Directive proposal was being withdrawn. It left the directive in a state of uncertainty.

Shortly after, the EC unveiled a simplification package of chemical regulations in the Omnibus Act, arguing it would save the industry hundreds of millions in annual costs. However, the move sparked concerns from green lawmakers who accused the EC of siding with the industry and sacrificing consumer safety.

The personal care industry has been working to provide better working conditions to women shea processors. The changes applied to Classification Labeling Packaging, and chemical regulations. They aimed to simplify chemical labels for cosmetic products, which the EC argued does not compromise safety. 

Meanwhile, Bas Eickhout, president of The Greens and the European Free Alliance, released a statement after the announcement, accusing the simplification of benefiting the chemical industry. 

“Health protection is thrown overboard to increase the profits of the chemical industry. With this new proposal to deregulate chemicals, the EC is undermining consumer transparency and putting people and their environment at risk,” said Eickhout.

This followed an earlier draft legislation from the EC proposing to shorten the list of hazardous substances that are banned in cosmetics.

“The demand for ‘simplification’ has come specifically from Europe’s chemicals producers and been interpreted in parts of the Brussels bureaucracy as outright deregulation,” a ChemSec spokesperson told Personal Care Insights.