Human rights advocates are warning that a watered-down version of the European Union's ethical supply chain law approved in late June would effectively unravel crucial protections for victims of corporate abuses, and undo years of progress on human rights issues.

“EU member states want to turn the European supply chains law into a toothless tiger, failing victims and survivors of abuses in the supply chain of European companies,” Human Rights Watch senior corporate accountability advocate Hélène de Rengervé said in a July 1 release. "This proposal betrays the EU’s commitment to human rights and sustainability and would do little to prevent human rights and environmental harm in supply chains.”

The EU's Corporate Sustainability Due Diligence Directive (CSDDD) — originally proposed in 2022 — requires large European companies to closely monitor their supply chains for human rights abuses to identify, assess, prevent and mitigate any potential impacts on workers and the environment, including forced labor, pollution, emissions and more. It was formally adopted in July 2024, before an early-2025 push led by Germany and France to kill the directive altogether. 

Read More: EU Members Call for Cuts to Ethical Supply Chain Rules

After months of negotiations, member states instead agreed on June 23 to a significantly watered-down version of the CSDDD, which dramatically reduces the number of companies that would be affected, limits due diligence requirements to direct suppliers, and removes a provision that had allowed victims of human rights abuses to sue their employers. The UN's Office of the High Commissioner for Human Rights stated in a late-May release that the watered-down version of the CSDDD "would undermine the impact of this important directive," while a coalition of former UN and EU leaders labeled the proposal a "deeply worrying backward step."

Proponents of the scaled-back version of the CSDDD have pointed to a need to simplify the directive, and reduce the burden on smaller businesses. The EU has also faced pressure from the Trump administration over how it would be enforced against U.S. businesses operating in Europe.

Now that EU members have agreed to the terms of the new CSDDD, the EU Parliament and Presidency will take up negotiations on a final version, before adopting it into law.