Macron and Merz Push to Scrap EU’s Sustainability Law, Sparking Green Policy Clash

On May 19, 2025, French President Emmanuel Macron joined German Chancellor Friedrich Merz in a bold call to abolish the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), a landmark law mandating companies to tackle human rights abuses and environmental harm in their supply chains. Speaking at the “Choose France” summit, Macron argued that scrapping the CSDDD would boost Europe’s competitiveness against the U.S. and China by slashing regulatory burdens. This dramatic U-turn, echoed by Merz in Brussels, marks a seismic shift in the EU’s green agenda, but it’s already hitting resistance from civil society and centrist lawmakers. Is this a pragmatic pivot or a betrayal of Europe’s climate and human rights commitments?

A Law Under Fire

The CSDDD, proposed in February 2022 and adopted in May 2024, requires large companies to identify, prevent, and mitigate adverse impacts—like child labor, forced labor, deforestation, and pollution—across their global supply chains. It covers upstream suppliers and some downstream activities like distribution. Initially targeting firms with 500 employees, the law was watered down after France pushed for a 5,000-employee threshold, settling at 1,000, slashing its scope by 80%, per ESG Today. Full implementation, already delayed to 2028 via the EU’s February 2025 Omnibus package, now faces outright repeal.

Macron’s rationale, mirrored by Merz, hinges on economic survival.

“CSDDD and other regulations must be put off the table,” Macron told business leaders, citing the need to “synchronize” with less-regulated markets like the U.S.

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Merz, during a May 9 Brussels visit, called the directive a “bureaucratic monster” costing firms €5 billion annually, per Politico. Both leaders frame it as a drag on competitiveness, with the EU’s 2.5% GDP growth in 2024 lagging the U.S.’s 3.2%, per Eurostat.

The Omnibus package already softened the CSDDD, limiting due diligence to direct partners, cutting monitoring from yearly to every five years, and easing demands on SMEs, per the European Commission. France’s earlier push for an “indefinite postponement” set the stage, but Macron’s call for abolition—backed by Merz—escalates the fight, aligning with business lobbies like BusinessEurope, which claim the law’s compliance costs hit €1.2 million per firm, per a 2024 Deloitte study.

Why It Matters?

The CSDDD was a cornerstone of the EU’s Green Deal, aiming to align corporate behavior with the Paris Agreement’s 1.5°C target and UN human rights standards. It promised accountability for 13,000 large firms, covering 30% of EU imports linked to deforestation and labor abuses, per Human Rights Watch. Scrapping it could unravel progress on issues like the 152 million children in forced labor globally, per the ILO, or the 20% of cobalt in EU supply chains tied to unsafe mines, per Amnesty International.

Economically, the repeal could ease pressures on firms struggling with high energy costs—up 15% in the EU since 2022, per Eurostat—and looming U.S. tariffs under Trump’s 2025 trade threats, which target the EU’s €400 billion trade surplus, per Reuters. It might also aid transatlantic trade talks, as the U.S. views CSDDD as a non-tariff barrier, per Politico. But it risks alienating investors—68% of whom prioritize ESG, per a 2024 PwC survey—and consumers, with 74% favoring ethical brands, per IPSOS.

Environmentally, the stakes are dire. The EU’s supply chains drive 10% of global deforestation, per WWF, and weakening due diligence could spike emissions, undermining the EU’s 55% emissions cut goal by 2030.

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The Pushback and Political Hurdles

Opposition is fierce. Civil society groups, like the Fair Labor Association, argue the CSDDD aligns with UN and OECD standards, ensuring a level playing field, per Business & Human Rights. Ten European National Human Rights Institutions warned the Omnibus risks “undermining social and environmental justice,” per their February 2025 letter. Companies like Nestlé and IKEA, in a joint statement, stressed that “policy certainty” drives investment, opposing repeal, per Business & Human Rights.

Politically, Macron and Merz face an uphill battle. The European Parliament’s centrist coalition—EPP, Socialists, and Renew Europe (Macron’s group)—is unlikely to fully back abolition, per Politico. Germany’s SPD, Merz’s coalition partner, insists on keeping a reformed CSDDD, per their April 2025 agreement, with Finance Minister Lars Klingbeil calling repeal “reckless,” per Euractiv. Other EU states, like the Netherlands, support the law for its clarity, with Dutch firms urging implementation, per Business & Human Rights. Convincing the Council of the EU, where 15 states representing 65% of the population are needed, is no sure bet.

Macron’s shift is a head-scratcher. France’s 2017 Duty of Vigilance Law, a CSDDD precursor, made it a pioneer in supply chain accountability, yet Macron now echoes Merz’s CDU, which opposed the law from the start.

What’s Next?

The CSDDD’s fate hinges on the EU’s Omnibus process, with a key Council meeting set for May 22, 2025, to debate the simplification package. The European Parliament’s April 1 vote on the “stop-the-clock” delay showed tepid support for scrapping the law outright, per ESG Today. If Macron and Merz prevail, national laws like Germany’s Supply Chain Act could fall too, though France’s Duty of Vigilance Law, already stricter, might survive, per Verfassungsblog.

For businesses, repeal could save €4-6 billion in compliance costs by 2030, per KPMG, but risks reputational hits—80% of EU consumers avoid brands linked to abuses, per a 2024 YouGov poll. For the planet, it’s a setback: supply chain emissions, 11 times higher than direct emissions for most firms, per CDP, would face less scrutiny. Alternatives, like voluntary standards or OECD guidelines, lack the CSDDD’s teeth, per Shift.

Macron and Merz’s push reflects a broader EU tug-of-war: competitiveness versus values.

“We have to go fast and big to be back in the race,” Macron said, but at what cost?

As the EU navigates Trump’s trade threats and China’s economic rise, this debate will test whether it can stay a green leader or sacrifice its principles for short-term gains.

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