Major Corporations Urge EU to Repeal Climate Due Diligence Law Amid Competitiveness Concerns

A coalition of major European corporations, led by TotalEnergies and Siemens, has called on European Union governments to repeal the bloc’s corporate sustainability due diligence law. The companies argue that the regulation imposes excessive administrative burdens, constrains growth, and undermines Europe’s competitiveness in global markets.

In a joint letter reportedly sent to leading European policymakers, the signatories claim that removing the directive would demonstrate a renewed commitment to restoring industrial competitiveness. The message signals growing frustration among industry leaders about the EU’s increasingly complex sustainability and reporting framework.

What the Law Requires

The corporate sustainability due diligence directive, adopted last year, requires large companies to identify, prevent, and remedy environmental and human rights abuses across their supply chains. It also establishes potential financial penalties of up to 5 percent of a company’s global turnover for non-compliance.

The directive is part of a broader suite of EU climate and social responsibility measures, including the Corporate Sustainability Reporting Directive and the Carbon Border Adjustment Mechanism. Together, these initiatives aim to embed climate accountability throughout Europe’s economic activity and supply networks.

However, several industrial leaders now describe the legislation as disproportionately bureaucratic. They argue it creates uncertainty, raises costs, and discourages investment in European manufacturing. According to the companies, repealing the directive outright, rather than merely reforming it, would send a clear political signal that the EU intends to protect its industrial competitiveness while still pursuing climate goals through innovation rather than regulation.

Growing Business Pushback

This call to abolish the directive follows months of lobbying from industry groups seeking to delay or soften its implementation. Some governments, notably France and Germany, have also expressed concerns about potential impacts on their domestic industries.

Siemens, in a recent public statement, emphasized the need to reduce bureaucracy and streamline EU competitiveness rules. It urged policymakers to revisit overlapping climate and reporting requirements that it says are slowing growth across the European industrial base. TotalEnergies, meanwhile, has expressed similar concerns in past policy debates, advocating for a balance between environmental ambition and economic realism.

Strong Resistance from Civil Society

The proposal to repeal the directive has sparked strong opposition from environmental organizations, trade unions, and human rights groups. They argue that dismantling the framework would seriously undermine corporate accountability and Europe’s credibility on sustainability leadership.

Advocates insist that binding due diligence rules are essential for ensuring that companies address deforestation, forced labour, pollution, and carbon emissions throughout their global supply chains. Without such obligations, they warn, European firms could shift risk and responsibility to suppliers in less regulated regions.

Critics also caution that repealing the law could trigger a “race to the bottom” within the EU, as member states compete for industrial investment by lowering environmental and social standards.

Implications for Climate and Competitiveness

The debate highlights a broader tension between Europe’s environmental ambitions and its economic strategy. The Green Deal and Fit for 55 legislative packages rely on private-sector compliance to achieve net zero emissions by 2050. Diluting or removing due diligence obligations could slow the integration of climate risk assessments into business planning.

At the same time, many companies contend that the regulatory landscape has become fragmented, overlapping, and unpredictable. They point to a growing patchwork of reporting requirements, from ESG disclosures to emissions tracking, that together add administrative complexity and compliance costs, especially for multinational operations.

If the directive were repealed, large corporations could gain short-term relief from compliance costs. However, investors and sustainability-focused funds might react negatively, viewing repeal as a sign of weakening environmental governance. This could influence capital allocation, particularly in sectors such as energy, manufacturing, and raw materials that depend heavily on policy certainty.

Next Steps in Brussels

EU lawmakers are now reviewing possible amendments to simplify the directive. Some proposals would raise the minimum size threshold for companies covered by the law, while others would narrow its scope to focus only on the most material human rights and environmental risks.

A full repeal, however, would require broad political consensus among member states, a scenario seen as unlikely by most observers. Several countries with strong climate coalitions are expected to resist such a move, arguing that it would erode progress toward the EU’s 2030 and 2050 environmental targets.

Still, the letter from major corporations adds new pressure to an already polarised policy debate. It reflects growing anxiety within Europe’s industrial base over energy costs, regulation, and the global race to attract clean-tech investment.

A critical moment for Europe’s climate leadership

The outcome of this debate will have far-reaching implications for Europe’s climate credibility, trade competitiveness, and industrial resilience. Policymakers face the challenge of balancing short-term economic competitiveness with the long-term imperative of sustainability.

Whether the EU chooses to modify, postpone, or uphold the due diligence law, the controversy underscores a fundamental truth: achieving climate neutrality requires not only ambitious goals but also a regulatory framework that industry views as fair, efficient, and workable.

Source: reuters.com