European Union member states led by France and Germany are walking back on their commitment to protect human rights and the environment in global supply chains, Human Rights Watch said today. On June 23, 2025, member states agreed on a European Council position that, if it becomes law, would hollow out an EU directive on protecting rights in supply chains.
The directive, known as the Corporate Sustainability Due Diligence Directive (CSDDD), was designed to protect victims of human rights abuses as well as the environment while creating a level playing field for companies. It marked an important shift from voluntary standards to holding companies legally accountable for human rights and environmental abuses in their entire supply chain. It entered into force in July 2024 as part of the European Green Deal, the EU Commission's flagship project to make the EU more sustainable and climate neutral by 2050.
"EU member states want to turn the European supply chains law into a toothless tiger, failing victims and survivors of abuses in the supply chain of European companies," said Hélène de Rengervé, senior corporate accountability advocate at Human Rights Watch. "This proposal betrays the EU's commitment to human rights and sustainability and would do little to prevent human rights and environmental harm in supply chains."
The next step is for the European Parliament to adopt its position on the proposed rollback. This is a crucial and final opportunity for the parliament to take a stand to prevent the directive from unraveling and to retain meaningful protection for victims of corporate abuses.
Efforts to undermine the legislation began in February 2025, when the new EU Commission made a U-turn and advanced the so-called Omnibus proposal to strip the directive of its most important elements. These include the obligation for companies to conduct human rights and environmental due diligence across their whole supply chain and the possibility for victims to sue companies if their rights are abused. These measures were viewed as important compromises reached through careful negotiations.
Certain industry lobby groups appear to have played a major role in pushing for the changes. Their calls for competitiveness and simplification, which are being used to justify the rollbacks, hide a wider deregulation agenda and disregard the actual purpose of the law: to protect victims from abuse while creating a level playing field for companies.
The EU Agency for Fundamental Rights, the European Central Bank, progressive companies, legal experts and economists, high-level personalities, leading United Nations officials and experts, and the UN Working Group on Business and Human Rights have all criticized the move, urging the EU not to weaken the directive.
The June 23 decision, led by the Polish presidency, supports the commission's plan to limit mandatory and systematic due diligence obligations only to direct suppliers. As many human rights violations occur further along global supply chains, for example at the raw material level or in manufacturing, these limitations severely hamper the law's ability to curb abuses.
The decision also contradicts the UN Guiding Principles on Business and Human Rights, which extend the responsibility of companies to conduct human rights due diligence to the whole value chain. Limiting due diligence to direct suppliers would ignore the parts of the supply chain where most abuses occur, Human Rights Watch said.
"If the CSDDD is limited to the direct supplier, this will mean empty words for workers," said Kalpona Akter, a labor activist from Bangladesh. "We would be left out. It is unacceptable."
Member states have proposed to reduce the directive's requirements even further, by weakening climate mitigation plans and limiting the scope of the law to companies with more than 5,000 employees and a €1.5 billion net turnover.
Estimations by the Centre for Research on Multinational Corporations under its CSDDD data hub show that such a threshold would exclude 72.5 percent of companies currently covered under the 2024 law, reducing the number to fewer than 1,000.
The council's proposal to limit due diligence mostly to direct suppliers means companies could ignore the parts of the supply chain where most risks occur, while pushing down the cost and responsibility of due diligence to their direct suppliers through unfair commercial contracts.
The council's decision to replace an EU-level, harmonized rule to hold companies accountable with rules at member state level would also mean that there would be 27 sets of rules. This would make enforcing the law more complex and expensive, while weakening its preventive nature and encouraging forum shopping between member states, Human Rights Watch said.
Industrial disasters resulting in workers' deaths and injuries, such as the Rana Plaza building collapse in Bangladesh, and corporate abuses of human rights, labor rights, and environmental standards in global value chains have prompted a groundswell of support for binding legislation to hold companies accountable. Rights groups, trade unions, consumers, political leaders, and progressive businesses have pushed for the law.
But the legislative process, which began in 2020, has been difficult; with stiff opposition by multinationals and business associations, and with the governments of France, Italy, and Germany leading efforts, directly and through their employers' lobby group, to significantly dilute the most meaningful provisions of the law.
The unusual haste with which the commission put forward the Omnibus proposal, disregarding administrative and procedural obligations and failing to consult meaningfully with civil society, led eight civil society organizations to file a complaint with the European Ombudsperson's office in April. In response, the Ombudswoman opened an inquiry in May.
Human Rights Watch supports this very important initiative by the organizations and urges the Ombudsperson's office to try to finalize the inquiry as expeditiously as possible, ideally before the final text of the CSDDD is adopted. The inquiry is a major step towards full transparency and accountability in the commission's decision-making process, helping to ensure it reflects the EU's core democratic values.
"The European Parliament has an opportunity to stop this race to the bottom and fight for a law that truly holds corporations to account for human rights and environmental abuses," de Rengervé said. "Both victims of corporate abuse and EU consumers deserve better."
