German Chancellor Friedrich Merz has called for the full cancellation of the European Union’s Corporate Sustainability Due Diligence Directive (CSDDD), signaling a potential shift in Europe’s approach to environmental, social, and governance (ESG) regulation. In a statement made during his first official visit to Brussels, Merz expressed his intention to revoke Germany’s national implementation of the directive and urged the EU to follow suit.
“We will revoke the national law in Germany. And I also expect the European Union to follow suit and really cancel this directive,” Merz stated, voicing concerns over the directive’s compliance burdens.
Adopted in 2023 and slated for enforcement in 2028, the CSDDD mandates that large companies identify and address human rights violations and environmental harm within their global supply chains. The directive is a cornerstone of European Commission President Ursula von der Leyen’s agenda to embed sustainability and human rights into corporate governance across the continent.
While the directive has received strong backing from civil society and ESG advocates, it has faced significant opposition from parts of the business community. Critics argue that the regulations could impose significant financial and administrative burdens on companies, particularly in terms of auditing and managing supply chain risks, potentially harming Europe’s global competitiveness.
Merz, representing Germany’s center-right Christian Democratic Union (CDU), aligned himself with these business concerns, emphasizing the need for a more balanced approach to regulation. He also reiterated his broader support for efforts to reduce bureaucracy within the EU, positioning his government as a proponent of deregulatory policies.
“The European Union should be focused on reducing unnecessary bureaucracy rather than adding more layers of regulation,” Merz said.
This challenge from Germany, the EU’s largest economy, marks a significant divergence in the region’s policy landscape as it grapples with how to balance corporate accountability with business flexibility. The CSDDD, which was a key pillar of the EU’s sustainability strategy, may now face increased scrutiny, especially as the enforcement timeline approaches. The outcome of this debate could have profound implications for the future of ESG regulations in Europe, influencing the direction of sustainability governance across the continent.
