When the European Commission opened a public consultation this summer on how to implement its corporate sustainability due diligence rules, the exercise read less like routine guidance and more like a negotiation over how much of the law will survive. The consultation on Directive 2024/1760, running until late July, lands in the middle of a broader retreat from the regulatory ambition that defined Brussels a few years ago. The due diligence directive was meant to force large companies to police human-rights and environmental harms across their supply chains. It is now a test case for whether Europe can hold that line while chasing a competitiveness agenda that treats every obligation as a cost.
The reversal has been swift. Adopted only in 2024 after a bruising fight, the directive was quickly caught up in the Commission’s omnibus simplification drive, which promised to lighten reporting and compliance burdens on business. Deadlines were pushed back, the scope of covered companies narrowed, and the sharpest enforcement teeth were softened. The consultation over implementation guidelines is the next stage in that recalibration, shaping in practice what the surviving text will actually require of firms on the ground.
Two worldviews are colliding here. One holds that Europe overreached, piling disclosure and diligence duties on companies already struggling against lighter-touch rivals in the United States and Asia, and that trimming the rules is simply realism about where growth comes from. The other warns that the Union is dismantling its own signature achievement, a first-of-its-kind attempt to make global supply chains accountable, and that predictability, not deregulation, is what business actually craves. Firms that invested early in compliance systems now find the goalposts moving, which is its own kind of burden.
The economic evidence does not resolve the fight, because the costs and benefits fall on different ledgers. Compliance costs are concrete, near-term, and easy for a chief financial officer to tally. The benefits of due diligence, fewer forced-labour scandals, more resilient supplier relationships, reduced legal and reputational tail risk, are diffuse and slow to materialise. When a competitiveness panic sets the tempo, the measurable cost almost always outranks the unmeasurable gain, which is why simplification has proved so politically irresistible.
There is also an external dimension the internal debate tends to underplay. The directive was never purely domestic; its extraterritorial reach was meant to raise standards across the global suppliers that sell into the European market, giving the Union leverage it rarely wields. Diluting it does not only relieve European firms. It weakens Europe’s ability to export its regulatory norms, the so-called Brussels effect that has long been one of the Union’s most potent instruments of influence. A softer directive is a quieter Europe on the world stage of corporate standards.
What the consultation cannot disguise is that the Commission is trying to have things both ways. It wants to keep the reputational credit for pioneering supply-chain accountability while removing the provisions that made the law bite. Guidance documents are a convenient venue for that ambiguity, because they can reassure civil society that the framework endures even as they hand companies the flexibility to comply lightly. The result risks satisfying no one: too demanding for those who wanted the directive gone, too hollow for those who believed it meant something.
The stakes reach beyond one law. How Brussels resolves this consultation will signal whether the current Commission’s simplification agenda is a targeted pruning of genuine excess or a broader unwinding of the social and environmental commitments made in calmer years. Business wants clarity above all, and the worst outcome would be a directive so hedged and deferred that no one can say what it demands. Europe is discovering that dismantling a rulebook is nearly as fraught as writing one, and that the reputation for predictability it prizes is easier to spend than to rebuild.
