This edition of the Debrief unpacks investors and businesses continuing efforts to resist the watering down of the CSDDD, through urging the Commission to keep critical review clauses in the text and updating statements demanding that Europe stay the course on its green transition. Also in the EU, trade tensions flare with the approval of the its largest-ever deal with Mercosur, sparking fears over the future of the Deforestation Regulation.

In brighter news, Spain just bucked the ESG rollback trend by passing bold climate legislation, proving that environmental and social protection is still a priority for many EU member states. Legal scrutiny over corporate complicity is also growing in Australia, as civil society groups take action against domestic supply chains connections to Uyghur forced labour.

Keep reading to dive into all this and more...

Upcoming Events

SOMO is hosting two corporate accountability events during NY Climate Week, entitled Justice in Motion: Rethinking Mobility to Reduce Mining and Uphold Rights and 'Responsible Disengagement from Fossil Fuels: Guiding Principles from Civil Society.' Find out more about these events and register here.

Swedwatch and ACC are co-organising a webinar on 'Overdue Diligence', which will discuss show funders and donors can 'unlock the power of mHREDD by backing worker-and community-led approaches to accountability.' Sign up to attend the webinar on the 23 of September, from 3-4:30pm CET.

Corporate Sustainability Due Diligence Directive (CSDDD)

Updates:

Investors urge the EU Parliament to keep financial review clause in the CSDDD.

On the 1st of September, 34 European investors and NGOs sent a letter to Members of the European Parliament urging them to retain a key review clause in the Corporate Sustainability Due Diligence Directive.

This clause would obligate the European Commission to review whether financial institutions should be legally required to assess and mitigate their impacts on people and the planet.

Retaining this clause is a modest ask, as its scope does not immediately impose obligations on the financial sector but simply asks for a review based on analysis and research.

Signatories, including ShareAction, WWF and Oxfam, argue that committing to this review will allow EU policymakers to 'better understand how financing and investment decisions are impacting fossil fuel expansion, deforestation, and human rights abuses in supply chains.'

450+ investors and businesses have updated their joint statement on the EU Commission’s ‘omnibus’ proposal

A joint statement calling on EU policymakers to preserve the core of the EU sustainability framework has been backed by 130 investors and financial institutions, 87 real-economy companies and 92 other organisations.

The statement ‘emphasises that preserving the key elements of both the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) is essential to redirect capital flows toward forward-looking technologies and sectors, in alignment with the objectives of the Clean Industrial Deal.'

Bucking the trend on ESG deregulation, Spain has approved a new "Climate Emergency Plan" that tightens corporate disclosure rules and accelerates its clean energy transition.

The law includes mandatory carbon reporting for scope 1 & 2 emissions in 2026, the submission of action plans on greenhouse reduction plans and the establishment of a new national agency for civil protection and introducing stricter land-use and forest management rules to build climate resilience.

Felix Hawkins’ Linkedin roundup on the law argues that this move proves that ambitious and legally binding national climate laws are still on the agenda, despite the EU lowering the bar with the Omnibus proposal.

Implementation timeline:

  • October 2025: Planned vote on the Omnibus in the Plenary of European Parliament (date TBC)
  • Late 2025-2026: Trilogue on Omnibus (Parliament, Council and Commission) to negotiate final legal text.
  • From 2028 [delayed]: Companies with 5,000+ employees and a net turnover of 1 ,500 million EUR must comply.
  • From 2028 [unchanged]: Companies with 3,000+ employees and a net turnover of 900 million EUR must comply.
  • From 2029 [unchanged]: Companies with 1,000+ employees and a net turnover of 450 million EUR must comply.

EU Deforestation Regulation (EUDR)

Updates:

EU Commission approves its ‘largest ever’ trade deal with the ‘Mercosur’ South American bloc.

This controversial trade deal would allow Brazil and the four other Mercosur states (Argentina, Bolivia, Paraguay and Uruguay) to sell agricultural goods to EU countries with fewer restrictions. In turn, the agreement would see Mercosur members progressively remove tariffs on 91% of EU imports, including cars, machinery and pharmaceuticals.

Separately, the Commission also approved a trade deal with Mexico.

The European Commission also proposed an internal workaround to appease the demands of France, Poland and Italy two senior Mercosur diplomats told POLITICO.

Much to the concern of campaigners, the EU executive has opted to push forward the deal through a procedure known as “splitting”, where the trade part of the agreement is treated separately from political and co-operation clauses.

As reported by Politico, this means that only a qualified majority of member states (55 per cent of countries representing at least 65 per cent of the total EU population) is needed, rather than the European Council’s full backing, for it to become reality.

Further Reading/Listening:

NGOs and sustainability experts respond to the EU trade deal and its implications for the EUDR.

In ‘Sustainability Views’, Philippa Nuttall interviews experts on what this landmark deal means for the future of the EU Deforestation Regulation. Colette van der Ven says that generally the lack of attention to deforestation within the deal “reflects a new geopolitical reality where interests, rather than values, are driving the agenda”.

When questioned whether the deal is the final straw for the EUDR, Greenpeace EU's senior legal strategist Andrea Carta told Sustainable Views that it remains to be seen “what will prevail in reality.”

Commentators are particularly concerned by the deal’s “rebalancing mechanism”, which “allows either side to request concessions or compensation if a new regulatory measure impairs trade or investment benefits.”

French MEP Pascal Canfin shared that this mechanism threatens the EU's ability to keep developing the EUDR, claiming 'if we decide to expand its scope and it targets the Cerrado, it will have an impact on trade with Brazil for sure. The political cost of enhancing the EUDR is undoubtedly rising.”

Separately, Global Witness has called on the EU Commission to deliver on the landmark EUDR without delay and reject the EU-Mercosur trade deal which weakens protections for forests.

Implementation timeline:

  • 30 June 2025: Country benchmarking act adopted
  • 30 December 2025: Obligations stemming from the regulation will be binding for large operators and traders
  • 30 June 2026: Obligations stemming from the regulation will be binding for micro- and small enterprises

EU Forced Labour Regulation (EUFLR)

Update: None

Further Reading: None

Implementation timeline:

  • 2026: EU Commission to publish guidelines, including a forced labour risk database.
  • 14 December 2027: law becomes applicable.

Uyghur Forced Labor Prevention Act (UFLPA)

Updates:

New investigative reporting from TBIJ finds that Vans, North Face, Timberland may be skirting the UFLPA to source from China.

According to new research by Daniel Murphy, 'one in every five pairs of trainers in the world are made in a single port city in China, Jinjiang.' Thousands of working in these shoe factories are Uyghurs, Kazakhs and Kyrgyz, forced to labour under duress.

Taiwan’s Fulgent Sun Group, a footwear giant that services dozens of major clients, is based in Jinjiang and has supplied shoes to brands including Nike, La Sportiva, Jack Wolfskin and Vans.

State media articles document the factory’s decade-long cooperation with the Chinese government’s programme transferring Uyghur and Kyrgyz workers from Xinjiang.

Kmart supply chains under scrutiny for potential Uyghur forced labour links in Australian court case.

The Australian Uyghur Tangritagh Women’s Association (AUTWA) has brought a federal court case against retail giant Kmart, seeking ‘preliminary discovery of documents relating to Kmart’s supply chains and potential links to forced labour in the Uyghur homeland.’

Further reading:

Professor Laura Murphy and Charlotte Tate assess the impact of the UFLPA on preventing forced labour 3 years post-passage for CSIS

Through analysis of corporate and government records, the piece finds evidence that the UFLPA is indeed effecting significant change.

Murphy and Tate recognise emerging challenges, such as the recent cuts and agency reorganizations which have ‘eliminated the vast majority of funding to civil society organizations and academic institutions that provide information critical to enforcement.’ This could seriously impair corporate compliance efforts as well as government enforcement. They also argue that enforcement should be more robust.

However, overall, the evidence suggests that legislation prohibiting the import of forced labor made goods — matched with robust enforcement of that legislation — has shifted supply chains over relatively short periods of time and excluded materials made with forced labor from their products destined for the United States.

Disclaimer: This newsletter is for general informational purposes only. It does not, and is not intended to, constitute legal advice.