Scholars Warn of Dire Consequences if EC Weakens Corporate Accountability Laws

Last updated Jun 18, 2025

Pressure on the European Commission to Dilute Corporate Accountability Laws

Legal scholars, environmental organizations, and economists worldwide have sounded the alarm over the European Commission’s (EC) deliberations to weaken corporate accountability laws. Critics argue that bending to corporate lobbying pressure threatens to undermine commitments to corporate accountability, human rights and environmental protections, leading to increased costs for both companies and society.

Ambitious Corporate Sustainability Regulations in Question

The Corporate Sustainability Due Diligence Directive (CSDDD) by the European Union (EU) has been a subject of contention, with prominent figures including French President Emmanuel Macron and German Chancellor Friedrich Merz opposing it. The critics argue that the regulations could potentially harm Europe’s competitiveness, leading to their support for the EC’s “Omnibus Simplification Package”. This proposed package would strip companies of their obligation to monitor their supply chains for violations, eliminate mandatory climate transition plans, and weaken enforcement mechanisms, including civil liability provisions.

Strong Opposition to the Weakening of Corporate Accountability Laws

Despite the political pressure, legal and economics scholars, businesses, and countries like Sweden and Denmark have joined forces to protect these regulations. These groups argue that removing these regulations risks creating a litigious landscape and the implementation of inconsistent national requirements.

Maintaining Sustainability Regulations Central to Corporate Success

Advocates like Thom Wetzer, a law and finance professor at the University of Oxford, and numerous other legal scholars have warned the EC that the removal of these regulations could pose new financial and legal risks for companies. They argue that the absence of guiding regulations could make achieving sustainability and climate goals more challenging and costly for companies.

European Companies Already Complying with Sustainability Regulations

Many large European companies, including IKEA [F500E #85, as Ingka], Maersk [F500E #70], and Unilever [F500E #49], have already started steps to comply with the regulations. These companies, among others, have signed an open letter expressing support for the CSDDD and warning against the risks of revisiting existing legislation.

European Economists Criticize EC’s Plans

The EC’s plans have also raised concerns among prominent economists, who dispute claims that the sustainability regulations harm European competitiveness. They cite other factors contributing to Europe’s economic challenges, such as the energy price crisis, declining global demand, and wage stagnation. These economists argue that the benefits of the regulations far outweigh the minimal implementation costs.

EC’s Proposed Changes Could Undermine Human Rights and Environmental Protections

More than 360 global NGOs and civil society groups have voiced their concern over the potential human rights and environmental implications of the EC’s proposed changes. They argue that the Omnibus would deprioritize human rights, workers’ rights, and environmental protections in favor of deregulation.

The Future of Europe’s Sustainability Transition

As the Omnibus proposal moves through the European Parliament, the outcome will likely have far-reaching implications for corporate accountability, human rights, and the climate change fight. The key question remains whether the EU institutions will maintain their original sustainable transition goals or yield to corporate lobbying power.