EU Under Fire From European Business Leaders Over Looming CS3D Rules

Ursula von der Leyen, president of the European Commission, at a conference on European competitiveness in Brussels, Belgium, on Tuesday, Sept. 16, 2025. Last year, Mario Draghi issued an influential report that provided detailed recommendations to the European Commission on creating a capital markets union and funding innovation and growth. Photographer: Simon Wohlfahrt/Bloomberg

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Proponents of the European Union’s (EU) heavy-handed supply-chain due diligence rules have been worked hard to create a narrative that European investors and European businesses want the EU’s new CS3D regulatory requirements to move forward. Many believed it was a dubious notion from the start, and now, a strong and clear message from nearly fifty leading French and German companies has eliminated any doubt that European homegrown businesses have had enough of Brussels’s ESG obsession.

CEOs Urge EU To Scrap CS3D

Reuters reported on October 10 that 46 CEOs, led by TotalEnergies CEO Patrick Pouyanne and Siemens CEO Roland Busch sent a letter to French President Macron and German Chancellor Merz calling for aggressive action to prioritize competitiveness on five fronts: antitrust and competition, deregulation and simplification, capital markets unification, energy security, and “strategic sovereignty” in key industries. The letter came on the same day on which the Xi Jinping government in China announced heavier restrictions on exports of rare earth minerals using supply chains under its control.

The two-page letter is direct and to the point. It calls for reform of the EU’s merger guidelines, “full abolishment” of the Corporate Sustainability Due Diligence Directive (CS3D), a moratorium on the Data Act and AI Act, national grid investments, and more.

Most notable is the business leaders’ unequivocal call to scrap CS3D, a position which puts them in line with U.S. businesses and officials in the Trump administration who have called for similar action. The directive – which would require major European companies, foreign exporters, and their business partners to conduct extensive supply chain due diligence for human rights and environmental risk – has been mired in controversy since it was first proposed in 2022.

Politicians and business leaders across the globe, including Commerce Secretary Howard Lutnick and Energy Secretary Chris Wright, have taken aim at the directive’s extraterritorial overreach, high compliance costs, and prescriptive net-zero mandates. The vast due diligence requirements will disproportionately impact companies operating in energy-producing or energy-intensive sectors, further disincentivizing investment and industrial activity across Europe and fracturing global supply chains at a time when China is already cracking down on the supply chains under its control and making heavy inroads into the European markets.

Amended CS3D Proposal Due Soon

Facing a double-header energy security and economic competitiveness crisis, politicians in Brussels paused the directive to pursue a “simplification” initiative. In the coming weeks, the European Parliament will release an amended, pared-down directive axing some of its most onerous elements such as the requirement to reduce scope 1, 2, and 3 emissions in alignment with the Paris Accords.

But at this juncture in negotiations, the European Parliament appears likely to keep much of CS3D intact. This outcome would be a far cry from the EU business leaders’ call for “full abolishment.” The CEOs argue that nothing short of a full rollback of the directive is necessary to signal that “government and the Commission are really engaged to restore competitiveness in Europe.”

In the past, European executives have often praised “the intent” of the directive, offering more nuanced criticism in public while bashing the law behind closed doors. This CEO letter marks a fundamental shift in rhetoric from Europe’s most critical businesses.

Macron, Merz Urge EU To Scrap CS3D

It’s worth noting that Pouyanné and Busch are writing to a receptive audience. President Macron and Chancellor Merz, the leaders of the two largest economies within the EU, have both called for CS3D to be fully repealed in order to promote European competitiveness on a global stage.

To put a finer point on it: The heads of state and dozens of the largest businesses hailing from Europe’s two most essential economic engines fundamentally oppose CS3D. The question now is whether their representatives in Brussels will heed their warnings.

Members of the European Parliament have just weeks to decide whether they will adjust CS3D on the margins or do what the continent’s business leaders say needs to be done and pursue an all-out repeal. The pain of a repeal is obvious – President Ursula Von Der Leyen’s centrist coalition would take heat from her colleagues to the left and environmental activist groups even further on the political fringes. But the pain of following through with a law that many believe could cripple the European economy would cast a longer shadow on her leadership’s legacy than that of a tough news cycle.