The federal government of Germany has moderated its stance on the European Union's Corporate Sustainability Due Diligence Directive (CSDDD) and retreated from prior recommendations that the legislation be completely abolished. The German government's priority now is to "de-bureaucratize" and "streamline" the regulations rather than abolish them, a spokesman for the government stated.

Following harsh words from German Chancellor Friedrich Merz earlier in May, government spokesman Stefan Kornelius made the explanation at a press conference. Merz had expressed a desire to see the CSDDD "cancelled" in a letter to European Commission President Ursula von der Leyen, raising doubts about Germany's continued support for the law. Shortly after, French President Emmanuel Macron echoed his words, urging that the order be withdrawn and stating that France's stance was now "very aligned" with that of Chancellor Merz.

One of the EU's most ambitious legislative initiatives to hold businesses accountable for their effects on human rights and the environment across their value chains is the CSDDD, which was formally adopted in May 2024 following a protracted negotiation and revision process. The European Commission first suggested the directive in February 2022. It mandates that big corporations recognize, avoid, lessen, and repair harms like child labor, forced labor, environmental pollution, deforestation, and ecosystem destruction. These responsibilities extend to specific downstream operations, such as recycling and distribution, as well as their upstream supply chains and direct operations.

The directive's final version was, however, greatly diluted due to opposition from some EU member states and companies who were worried about regulatory restrictions. The law's reach was restricted, which meant that fewer businesses were impacted, and the timeline for complete implementation was extended.

Additional delays and modifications to the CSDDD have been proposed as part of the European Commission's larger "Omnibus process," which was initiated in February 2025 to lessen the regulatory constraints on enterprises pertaining to sustainability. These recommended changes include limiting the data that can be requested from small companies, pushing the implementation date to 2028, mandating complete due diligence only with direct business partners (rather than across the entire supply chain), and decreasing the frequency with which the effectiveness of due diligence is evaluated, from yearly to once every five years.

Germany's more subdued tone follows the formation of a new coalition administration in April 2025. The government pledged to repeal Germany's national Supply Chain Act (Lieferkettensorgfaltspflichtengesetz or LkSG), which requires comparable due diligence procedures, and replace it with the EU-level CSDDD as part of the coalition agreement. This gave the impression that Chancellor Merz's statements were contradictory, prompting inquiries as to whether Germany planned to renounce its commitments under both EU and national law.

In response to this inconsistency, Kornelius said that the coalition is still dedicated to getting rid of the LkSG, but that it should be replaced by a simpler, less burdensome European system. He underlined that Germany is cooperating with the European Commission to promote its aim of streamlining and harmonizing EU sustainability legislation under the Omnibus process.

"De-bureaucratizing the European framework in accordance with the Commission President's recommendations in the Omnibus Act is our goal," Kornelius stated. "The aim is also to streamline the European Supply Chain Directive in its comprehensive impact as part of the EU Commission's reform efforts to streamline bureaucracy."

This change in rhetoric suggests that, rather than categorically rejecting the directive, Germany is now prepared to back a modified version of it. The difficult balancing act between maintaining sustainability goals and allaying business concerns about regulatory and administrative obligations is reflected in the recalibration.

The EU's overall sustainability and human rights policy continues to be anchored by the CSDDD. Its future is now contingent upon the ongoing discussions between the Commission and the member states, as well as the directive's capacity to adapt to changing economic priorities while preserving its fundamental moral goals. Whether the directive maintains its integrity or is severely watered down in practice will depend on the next several months, as both Germany and France are pushing for significant changes.