It’s getting increasingly difficult to parse what’s going on within the halls of power in Brussels. Not that it was easy figuring things out in the first place.
Take the European Commission’s so-called “omnibus” package, which proposes sweeping amendments to legislation meant to hold large corporations operating within the European Union accountable for their environmental and social impacts, including the corporate sustainability reporting directive, or CSRD, and the corporate sustainability due diligence directive, a.k.a. the CSDDD.
Last we heard—just over a week ago, in fact—members of the European Parliament’s legal affairs committee, or JURI, voted in favor of a resolution setting out the legislative body’s position, appearing to pave the way for negotiations with European member states on a final legal text that would significantly shrink the scopes of the CSRD and CSDDD by downsizing the number of businesses that need to report by 70 percent.
In terms of adjusting corporate thresholds, both the European Council and JURI were broadly aligned with each other: The CSRD, they said, should cover only companies with at least 1,000 employees and a minimum of 450 million euros ($523 million) in annual net turnover, while the CSDDD, they added, should apply only to companies with 5,000 or more employees and over $1.5 billion euros ($1.7 billion) in annual net turnover.
But JURI made other demands, too, such as limiting due diligence obligations to areas with the most severe risks, jettisoning an EU-wide civil liability regime and loosening the climate alignment of transition-plan obligations. It appeared that what was once hailed as a game-changing move to bolster human rights, environmental due diligence and corporate reporting across the value chain would be weakened to the point of being completely toothless.
Except that the European Parliament decided that this mandate was a no-go. On Wednesday, just two days before the hashing out was slated to begin, Ministers of the European Parliament voted 309 votes to 318, with 34 abstentions, rejecting the committee’s position. It was a move that reflected the deep divisions among the lawmakers, some of whom think that the changes go too far and others not nearly far enough. Instead, MEPs will vote on amendments to the omnibus package at the upcoming plenary session in Brussels on Nov. 13.
It’s confusing times all around, especially when the rules had supposedly been put to bed ages ago. Even so, some observers see the schism as an opportunity to relitigate the relitigation.
Writing on LinkedIn, for example, the European Coalition for Corporate Justice, a coalition of civil society organizations and NGOs across Europe, said the “rejection reopens a negotiating platform that gives pro-EU forces a chance to find common ground—instead of letting the pressure of climate deniers and corporate lobbies dictate the outcome.” Its message to lawmakers: stand your ground.
“The CSDDD must remain a strong, enforceable law that delivers justice for victims and accountability for companies,” it added. “The coming weeks will be decisive in ensuring that Europe’s sustainable business agenda continues to protect people, planet, and democracy. EU leaders have a clear obligation: stand firm, defend the values of EU citizens, uphold EU and international obligations under the treaties. The principles of our democracy depend on resisting the coordinated pressure against the EU’s sustainability legislation.”
Elisabeth von Reitzenstein, senior director of public affairs at Cascale, the multi-stakeholder organization formerly known as the Sustainable Apparel Coalition, sees the vote to block the omnibus package as worrying, however, because it means more things could unravel.
“For there to now be another opportunity for the two directives to be further watered down is extremely concerning,” she said in an emailed statement. “We must remember the original intention behind these pieces of legislation and can’t afford for them to greatly deviate from what was originally set out. This would send the wrong signal to the industry and non-EU markets, at a time when we should all be focused on strengthening human rights, environmental due diligence and corporate reporting.”
Lara Wolters, former rapporteur for the CSDDD, said she was saddened by the “good-faith cooperation that should be underpinning EU negotiations.” The Dutch MEP had resigned from her role as lead negotiator for the Progressive Alliance of Socialists and Democrats in October after socialist and liberal lawmakers dropped their opposition to the cuts because they feared that the center-right European People’s Party would align itself with the far-right and dilute regulations even further.
“The largest group in the European Parliament has failed to get a majority behind its plans to gut corporate sustainability rules,” she wrote on LinkedIn. “They watered down sustainability laws to a point that became indigestible for many progressives—who repeatedly warned them beforehand. They cooperated with the far right to the extent of sending out formalized compromises together, but then blackmailed their way back to an ‘or else’ deal in the center.”
Wolters said that there was only one way forward: go back to “where we should have started” with “good faith negotiations and compromise on all sides.”
“What started with a rushed and flawed proposal by the European Commission was exacerbated today by a clear lack of EPP leadership in Parliament: a refusal to make a fundamental political choice on whether to cooperate as a matter of principle with the groups to the EPP’s right, or those to the EPP’s left,” she said. “Hand on my heart, many of us were willing to engage in true compromise—in genuine simplification that would have required difficult negotiations. But what was on the menu from the very start was destruction rather than simplification and, importantly, a lack of genuine, adult dialogue. Today’s result is proof that bullying does not make for stable parliamentary majorities.”
But further complicating matters is a ramp-up of pressure on the European Union by the United States, which joined Qatar this week in warning the 27-member bloc that it could face higher prices for “critical energy supplies” unless it changes—or abandons—the CSDDD.
In a letter to Europe’s heads of state on Wednesday, the two governments said that the way the CSDDD is currently worded also poses an “existential threat” to the future competitiveness and resilience of the continent’s industrial economy.
“It is our genuine belief, as allies and friends of the EU, that the CSDDD will cause considerable harm to the EU and its citizens, as it will lead to higher energy and other commodity prices, and have a chilling effect on investment and trade,” the letter said. “It is of great concern that none of these issues have been properly addressed in the alternative texts that have been formally adopted to date by the European Council and the European Parliament.”
It was only last week that the Trump administration successfully pushed back a global measure requiring cargo ships to restrict their greenhouse gas emissions or pay for their pollution, a first for legally binding carbon pricing. Whether its campaign against the CSDDD will have the same effect is anybody’s guess at this stage.
The heads of nations such as Germany, France and Italy, meanwhile, see this particular omnibus as only the beginning, saying that simplification is “key for competitiveness.” In a missive to European Council President António Costa on Monday, they and 16 other countries called for a “systematic review of all EU regulations to identify rules that are superfluous,” which requires “a constant stream of omnibus proposals from the European Commission throughout its term of office.”
And the French and German CEOs of nearly 50 firms, including TotalEnergies and Siemens, have further called for the complete removal of the CSDDD, writing in a letter earlier this month to French President Emmanuel Macron and German Chancellor Friedrich Merz—themselves opposed to the directive—that its abolishment would be a “clear and symbolic signal to European and international companies that the governments and the commission are really engaged to restore competitiveness in Europe.”
But the omnibus package aside, it’s been a year of U-turns for Brussels. A proposed law targeting nebulous or unfounded corporate environmental claims, better known as “greenwashing,” is currently in limbo after it was yanked on the eve of final negotiations in June to overwhelming outcry. Then there is the EU’s landmark anti-deforestation law, which was recently postponed until December 2026 due to “technical issues.”
The EUDR has seen since its delay scuppered in favor of a softer six-month grace period before enforcement begins. The European Commission has also proposed several changes, including an exemption for small and micro “primary operators” and a waiver on due diligence statements from downstream traders. With the EU being what it is, the European Parliament and European Council still need to formally adopt the European Commission’s proposal before the regulation can kick in.
“EU environment commissioner Jessika Roswall initially stated technical IT issues but it seems that instead of directly addressing technical issues they just reduced the number of companies covered by creating broad exemptions that risk opening up new loopholes which will weaken the efficacy of the law,” Vanessa Richardson, senior forests campaigner at the Environmental Investigation Agency, a watchdog group, said in a statement. “The commission must now ensure that this approach does not become a backdoor for deregulation.”
Stientje van Veldhoven, vice president and regional director for Europe at the World Resources Institute, a research nonprofit, is looking on the bright side. He said that the deal could strike a “robust compromise”: businesses that have already invested won’t see their efforts wasted, and those hoping for future delays will glean no benefits.
“With this proposal, the commission is creating a workaround to allow compliance with the EUDR to begin at the end of December 2025,” he said in a statement. “While no tampering would have been preferable, this approach is far better than delaying enforcement another year or gutting the regulation, as some have called for.”
For Boukje Theeuwes, Head of Policy Influencing at Solidaridad Europe, a nonprofit for international cooperation, the “eyes of the world’s most vulnerable” are now on Brussels as the CSDDD, perhaps the most consequential piece of due diligence regulation to come down the pike, hangs in the balance.
“They are waiting to see whether the EU will uphold its values or settle for a watered-down law that fails to tackle the root causes of injustice in global supply chains and in the end will weaken Europe’s international position,” she said in a statement. “Any attempt to further weaken the provisions, be it by narrowing the scope of the supply chain, the companies in scope of the directive, or removing safeguards on disengagement, would send a clear signal: that the EU is prioritizing short-term interests over long-term responsible and stable trade relations with the rest of the world.”