"EU: Flagship Corporate Accountability Law Suffers Big Losses"

Scope of Directive Eroded, but Companies’ Due Diligence Obligations Remain

The European Parliament’s approval on December 16, 2025, of final amendments watering down the European Union’s flagship corporate accountability law severely undermines the EU’s ability to hold businesses accountable for human rights and environmental harms, Human Rights Watch said today. [...]

“All that is left of the EU’s trailblazing corporate accountability law is a skeleton,” said Helene de Rengervé, senior corporate accountability advocate at Human Rights Watch. “The final text means corporate interests are being prioritized over the rights of workers, communities, and environmental protection.” [...]

The amended law does preserve some important requirements, including the core obligation for companies to set up meaningful human rights and environmental due diligence processes over their entire supply chain. An earlier proposal to limit the scope of the due diligence only to direct suppliers was ultimately rejected.

Companies will also still have to implement a risk-based approach, prioritizing intervention in the most severe cases first, while being obliged to address all existing or potential abuses uncovered in their supply chain.

Companies will no longer be required, however, to implement climate transition plans to monitor and ultimately reduce their greenhouse gas emissions in line with the landmark Paris Climate Agreement, which EU countries ratified. Companies covered by the law, even with its reduced scope, are responsible for the equivalent of almost two-thirds of the EU’s total annual emissions of carbon dioxide (CO2), based on a recent study.

Overall, the changes have reduced the number of EU corporate groups covered by the law by 70 percent, from 3,363 to 980. The changes also deleted a requirement for member states to develop a uniform system for holding companies accountable in EU courts for human rights abuses, complicating victims’ access to justice.

“The amended law is far from the groundbreaking corporate accountability law that it set out to be,” de Rengervé said. “But communities, workers, and civil society partners should still use what is left of the law to fight for justice for victims of corporate abuses worldwide.”