Luxembourg lawmakers are at odds over the EU's delayed and revised supply chain law – perceived as weakening corporate accountability – now facing backlash from parties opposing the reforms.

The European Union's much-debated supply chain law, the Corporate Sustainability Due Diligence Directive (CSDDD), is now set to be delayed by one year and revised to ease obligations on companies. The European Parliament approved the postponement in early April, but the changes still need final approval from EU member states.

The revisions, part of a broader 'Omnibus package' introduced by the European Commission in February, aim to reduce red tape for businesses and enhance competitiveness. Key changes include removing the requirement for companies to submit regular reports on supplier working conditions unless serious concerns arise, and dropping EU-wide rules on corporate liability.

Instead, member states will now decide how companies can be held accountable – including whether NGOs or unions can bring class action lawsuits.

These adjustments have sparked sharp division. While many businesses welcome the reduced bureaucratic burden, arguing it will help protect Europe's economic interests, human rights organisations, and progressive lawmakers warn that the changes undermine corporate accountability and weaken the original intent of the law.

The revisions have also drawn mixed reactions in Luxembourg. A motion led by MP Franz Fayot of the Luxembourg Socialist Workers' Party (LSAP) called on the government to oppose the Omnibus package, receiving backing from opposition parties including The Greens, the Pirate Party, and The Left. They argue the reforms represent economic deregulation and dilute the progress made on corporate responsibility.

Economy Minister Lex Delles acknowledged the importance of protecting human rights and environmental standards but insisted that simplifying administrative procedures is necessary to avoid harming businesses.

The original CSDDD was adopted after years of negotiation, with the goal of holding large companies – those with over 1,000 employees and annual revenues of at least €450 million – legally responsible if their suppliers engage in child labour, forced labour, or human rights abuses. Although the law initially intended to cover a broader range of companies, member states pushed back, leading to a more limited scope.

Despite the weakening of certain provisions, the revised directive still obliges companies to identify and address human rights violations and environmental risks in their supply chains, with requirements to communicate these efforts transparently.

The CSDDD has been described by human rights advocates as a milestone for corporate accountability, while industry groups have long raised concerns over potential compliance costs. Critics of the rollback argue the original law would have only cost affected corporations an estimated 0.13% of their shareholder dividends.

The final outcome now hinges on the approval of the member states in the coming weeks.