Economy struggling, European Union decides to gut green rules, cut red tape for businesses

European lawmakers on Thursday voted to weaken landmark EU environmental and human rights legislation, prioritising business-friendly policies amid mounting economic pressures. The amendments, backed by the centre-right European People’s Party (EPP) and far-right groups, have sparked criticism from left-leaning and centrist members of the European Parliament, who view the alliance as a betrayal of the EU’s climate and social commitments.

Corporate sustainability rules curtailed

The legislation at the centre of the debate is the Corporate Sustainability Due Diligence Directive (CSDDD), which mandates that large companies monitor and mitigate adverse human rights and environmental impacts across their global supply chains. The law, approved only last year, requires firms to address issues like deforestation, pollution and forced labour, extending obligations to subcontractors and suppliers worldwide. Civil society and environmental groups hailed the law as a historic step toward sustainability and corporate accountability.

Thursday’s vote introduces major changes. The law’s application will now be limited to companies with over 5,000 employees and a turnover exceeding 1.5 billion euros ($1.7 billion), up from the original threshold of 1,000 employees. The European civil liability regime, which harmonised corporate obligations in case of breaches, will be replaced by national regulations. These adjustments are part of the EU’s drive to ease compliance burdens on struggling industries.

Political backlash and alliances

The vote triggered sharp criticism from traditional EPP partners. Rene Repasi of the Socialists & Democrats (S&D) accused the EPP of undermining compromise by forming an alliance with far-right forces, saying they “torpedoed any middle-ground solution.” Dutch Social Democrat Lara Wolters, a key proponent of the original law, walked out of talks, warning that the amendments would empty the law of its substance. Environmental groups echoed the concerns, arguing that the EU was weakening global human rights and environmental standards.

In contrast, EPP lawmaker Jorgen Warborn defended the amendments as creating greater “predictability” and competitiveness for companies while claiming Europe’s green transition would remain on track. Far-right groups, including the Patriots, celebrated the vote as a “victory for workers, farmers, and industry,” framing it as a step toward replacing the restrictive Green Deal with a more business-oriented agenda.

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Economic pressures driving change

The legislative rollback comes as EU industries face mounting competition from the United States and China. Right-wing and far-right parties, which gained significantly in the 2024 European elections, have pressed Brussels to adopt a more pro-business stance. German Chancellor Friedrich Merz and French President Emmanuel Macron have also criticised the CSDDD, citing the law as a barrier to competitiveness.

EU Industry Commissioner Stephane Sejourne defended the amendments, noting they reflect “firm and repeated demands of member states and the new parliamentary majority.” The changes aim to balance regulatory oversight with practical realities for large firms, though critics warn that Europe risks undermining its credibility on climate and human rights.

Global significance and implications

The CSDDD was proposed by the European Commission in 2022 after the Rana Plaza garment factory collapse in Bangladesh, which killed over 1,100 workers. Its 2024 approval was widely celebrated as a landmark achievement in corporate accountability and environmental protection. Thursday’s amendments, however, signal a recalibration toward economic competitiveness over sustainability, raising concerns about the EU’s ability to maintain its leadership in corporate responsibility.

The text now moves into final negotiations with member states and the European Commission, aiming for formalisation by year-end. Analysts note the vote underscores a growing tension within the EU: balancing ambitious climate and human rights goals against the immediate economic realities of struggling industries. With right-wing parties empowered and businesses under pressure, Europe’s future policymaking may increasingly prioritise economic concerns over environmental and social safeguards, reshaping its sustainability agenda for years to come.

 With inputs from agencies