Von der Leyen's second-term U-turns will come back to hurt Europeans

During her first Commission mandate, Ursula von der Leyen defended the EU Green Deal as a “strategy for growth that gives more back than it takes away”.

But in a complete and worrying reversal, her second term’s slogan seems to be deregulation, particularly when it comes to legislation setting the bar for environmental and human rights protection.

Last November, von der Leyen announced a proposal to review and simplify environmental and human rights laws passed in the previous term, including the Corporate Sustainability Due Diligence Directive (CSDDD) requiring large companies to prevent and remedy human rights and environmental abuses in their supply chains.

The regulatory break is presented by EU and member state leaders as a necessity amid an economic slowdown, assuming that Europe’s competitiveness would be boosted by reducing red tape for businesses.

France’s ministry of finance even called for an indefinite delay of some Green Deal laws in the current context. 

That, however, could not be further from the truth.

In his September 2024 report on competitiveness in the EU, Mario Draghi emphasised that “while the EU should aim to move closer to the US example in terms of productivity, growth and innovation, it should do so without the drawbacks of the US social model.”

While some actors seize upon the Draghi report to push for a deregulation agenda, this undermines the role of the EU in building what the European Environmental Agency calls “competitive sustainability”.

The EU will not benefit from backtracking on its sustainability standards but rather set itself up for failure, to the detriment of its institutional stability as well as human rights and the environment.

Extinguishing the trailblazer

To begin with, the move is damaging to Brussels’s reputation as a trailblazer in both regulation and human rights — and one with a unique global influence when it comes to corporate accountability. The CSDDD is among the most far-reaching due diligence legislations worldwide. It has inspired many countries to start developing binding norms for businesses that have enjoyed the impunity arising from voluntary standards. 

A U-turn on the CSDDD and other laws would put in the backseat the EU’s groundbreaking legal work to protect people and the environment.

But what the commission underestimates is that a sudden turnaround would also significantly affect businesses for the worse. Indeed, companies and investors rely on predictability to navigate the economy, especially in hard times when leaders abroad engage in a strategy of chaos. 

Reopening directives that were negotiated for years to achieve consensus and adopted through a democratic process — and only a few months after their approval — undermines the idea that EU laws provide a safe space for businesses to operate in. The EU cannot afford to choose chaos because of pressures from other countries’ leaders when its biggest asset has always been institutional and legal stability.

Currently, the commission is running invitation-only consultations where corporate lobbies outweigh civil society organisations and trade unions

Moreover, a sudden change in direction penalises those companies that have already invested significant resources and time in compliance ahead of the directive’s adoption. The ones that have committed to respecting workers, communities, and the environment will suddenly find themselves at a disadvantage compared to the 'laggers'. 

While EU rules are supposed to create a level playing field, the commission’s change of plans creates the opposite situation and focuses only on short-term problems. Responsible investors, companies, and academic experts have denounced the unfairness of such a move and how it would delay an urgently needed transition toward a just economic model that does not rest on exploitation and poverty. 

Lastly, the way the commission has been handling discussions of the package is damaging the principles of transparency and inclusion enshrined in EU treaties. Currently, the commission is running invitation-only consultations where corporate lobbies outweigh civil society organisations and trade unions. 

While 31 companies, 13 percent of them representing oil and gas interests, are given a seat to shape requirements on environmental and human rights due diligence, the victims of corporate abuses and those at the frontline of the environmental crises will go unheard.

If the burden for small and medium enterprises has been cited as another argument for deregulation, they form only 13 percent of companies invited.

This striking over-representation of certain voices and the lack of impact assessments behind the rush for deregulation run counter to the EU’s Better Regulation principles to develop laws in a way that is participatory and rooted in evidence. We fear that the rebuke of previous legislative efforts, especially held under these conditions, will erode the trust of the whole of civil society in the EU’s processes and their democratic legitimacy. 

The EU has always prided itself on its role as a global leader in both sustainability and human rights.

Now more than ever, it is crucial that the Union stand firm on its resolution to protect people and the planet, resisting the pressure to deregulate for the sake of short-term economic gains and pressures from rogue players.

Cutting 'red tape' will only worsen competitiveness while harming our potential to transition to a better economy and society – all while compromising the EU’s unity and purpose.