Dozens of companies and trade bodies were involved in an effort to water down key sustainability legislation in the EU, according to a new report published today.
The Corporate Sustainability Due Diligence Directive (CSDDD) was designed to oblige large companies trading in the EU to address human rights and environmental issues in their operations and supply chains. The original proposal was praised by climate and human rights groups for offering a path to strengthen corporate accountability.
A weakened version of the package passed in April 2024 and currently applies to 6,000 EU companies and 900 non-European companies trading inside the bloc.
The report by Social LobbyMap (SLM), a transparency project of the EIRIS Foundation, found that 88 companies and industry bodies lobbied the bloc over the CSDDD in the four years before it was passed, including 10 energy companies.
A successful lobbying campaign cut the number of companies within scope of the legislation by 80 percent, and reduced the number of rules they would be subject to.
“The EU is really pouring cold water on companies that were ready to contribute to giving higher priority to the environment and human rights,” said Kenneth Haar, a researcher at pro-transparency pressure group Corporate Europe Observatory.
“Thousands of companies may have taken significant steps to implement new rules on value chains, and now they are told that other companies and corporate lobby groups have successfully undermined the whole idea. That is destructive. They are rewarding the laggards, which bodes ill for the EU.”
DeSmog previously reported on the aggressive lobbying campaign waged by anti-climate allies of U.S. President Donald Trump against the CSDDD. It’s now unclear whether the flagship law will ever be fully implemented, with French President Emmanuel Macron and German Chancellor Friedrich Merz calling for the law to be scrapped entirely.
“There is an unparalleled competitiveness hysteria at play – one that sidelines any other concern in society,” Haar added.
Lobbying Tactics
The report found that corporate lobbying was most intense around key political moments. The largest surge in lobbying activity was seen over the German government’s announcement in February 2024 that it would not be supporting the package at an EU council vote, where it abstained.
A number of companies and trade bodies opposed requirements to report and mitigate potential harms in their supply chains on the basis that doing so would be too complicated.
The initial proposal would have subjected companies with 500 employees or an annual turnover of €150 million to greater scrutiny, but lobbying efforts from the French government raised this to apply to companies with 1,000 employees or an annual turnover of €450 million.
“These findings show that even within the corporate sector, the wishes of powerful corporate actors are prioritised over the need for of social and ecological transformation in Europe and beyond,” said Dieter Plehwe, a senior fellow at the Berlin Social Science Center.
In certain cases, individual companies were more supportive of the legislation than the trade associations that represent their interests.
The Danish energy company Ørsted signed a letter in February 2024 supporting the human rights dimension of the directive, while a member of the Confederation of Danish Industry, which opposed a mandatory EU-wide due diligence framework.
“It’s quite common that companies that are household names hide behind business associations,” said Daniel Freund MEP, a member of the Greens party in the European Parliament.
“Some of the more consumer facing companies have been outspoken in favour of due diligence requirements, but then have mobilised against due diligence legislation where it’s less visible.”
Of the eight policy areas included in the CSDDD, corporations lobbied most aggressively against human rights due diligence – the need for companies to ensure that their operations or supply chains are not undermining individual rights.
The clothing sector, which the report suggested was “a high-risk sector for human rights violations” was most vocally opposed to the proposed human rights obligations and suggested that mandatory reporting be made voluntary instead, the report found.
“It’s important that consumers can see how much corporations are involved in lobbying, which is why the lobby register is so important,” Freund said.
“But it’s also in the public interest that the counter argument is being made. That’s why I think it can be beneficial for certain environmental advocacy groups to get funding. Especially in a political climate where the right and far-right are trying to crack down on NGO funding in the EU.”
In the U.S., a backlash against efforts to improve corporate accountability has been led by President Donald Trump’s Republican Party. In November, 11 Republican-led states sued BlackRock, Vanguard, and State Street – three of the world’s biggest asset managers – over their Environmental, Social and Governance (ESG) policies designed to improve corporate responsibility. In West Virginia and Oklahoma, nearly two dozen banks have been barred from public contracts for trying to divest from fossil fuels.
Reports from this month show that a growing list of major U.S. corporations are either cancelling or delaying their sustainability reports – designed to show how they are meeting their climate commitments.
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This post has been syndicated from DeSmog, where it was published under this address.