Germany’s newly appointed Chancellor Friedrich Merz has publicly called on the European Union to repeal the Corporate Sustainability Due Diligence Directive (CSDDD), a cornerstone of the bloc’s ESG regulatory framework. Speaking in Brussels on May 9, 2025, Merz argued that the directive and other environmental and human rights supply chain regulations pose excessive burdens on European companies already struggling to compete with global economic powers like the United States and China. 

The CSDDD, part of the EU’s broader green and carbon neutral strategy, mandates that large companies identify, prevent, and mitigate human rights violations and environmental damage across their global value chains. Critics say the rules create high compliance costs, especially for multinational firms, and could deter investment and innovation at a time when the EU is working to boost industrial competitiveness. 

“Some regulations need to be reduced,” Merz told reporters during a joint press conference with European Commission President Ursula von der Leyen. “We hope that we’ll be able to repeal certain directives,” he added, directly referencing the CSDDD. 

The call reflects growing pushback from some EU member states and business leaders who argue that complex sustainability reporting and due diligence obligations under ESG legislation have become counterproductive. While the EU’s green transition is still officially a priority, momentum has shifted toward regulatory simplification amid geopolitical tensions and economic pressure. 

The European Commission is currently reviewing the CSDDD as part of its omnibus simplification package, which seeks to reduce red tape without abandoning climate and social objectives. However, Merz’s comments suggest that Germany, one of the EU’s largest economies, could lead a stronger movement to dilute or repeal ESG rules deemed too restrictive for European businesses. 

This debate underscores the tension between upholding climate and human rights standards and maintaining economic competitiveness in an evolving global market. 

Sources: 

https://business.inquirer.net/524756/germanys-merz-urges-eu-to-scrap-green-business-rules  

https://www.barrons.com/news/germany-s-merz-urges-eu-to-scrap-green-business-rules-4637b560