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The EU’s Retreat on Corporate Accountability
# The EU’s Retreat on Corporate Accountability:
### Growth, Imperial Extraction, and the Limits of Regulation
_by_ Alice Puerto*
In the series Degrowth and Ecosocialism: the global picture
In 2025, the European Union took what may prove to be a historic step backward. Under pressure from a consolidated right–far-right bloc in the European Parliament, led by the European People’s Party and allied with nationalist forces, the Corporate Sustainability Due Diligence Directive (CS3D) was significantly weakened. What had been presented as a breakthrough for human rights and environmental protection has been narrowed, delayed, and diluted in the name of “competitiveness.”
This retreat is not simply a technical adjustment to regulatory scope. It is a revealing moment in the political economy of Europe. It shows the structural incompatibility between a growth-dependent economic model and meaningful limits on corporate power. More fundamentally, it exposes how the prosperity of the Global North remains bound to extractive relations with the Global South, relations that degrowth and ecosocialist thinkers have long identified as forms of ecological imperialism.
## From Rana Plaza to Rollback
The original rationale for EU-wide due diligence legislation was clear. After the 2013 collapse of the Rana Plaza factory in Bangladesh, which killed 1,138 garment workers, producing for global brands public outrage forced European policymakers to confront the violence embedded in global supply chains (Reuters, “EU strikes deal to further weaken corporate sustainability laws”, 9 December 2025).
As political economist John Smith (2014) argues, the disaster functioned as a kind of “x-ray” of the global economy, revealing structural features that usually remain hidden from view. The collapse exposed how the production of cheap consumer goods for Western markets relies on extremely low wages and unsafe working conditions in export-oriented manufacturing zones. In this sense, the tragedy was not simply an industrial accident but a manifestation of the global system of labour arbitrage that underpins contemporary capitalism. Smith argues that the relocation of manufacturing to low-wage countries has become central to the accumulation strategies of multinational corporations. These wage differentials allow corporations to capture value generated by workers in the Global South while profits are beneficial and concentrated in the Global North.
The promise of due diligence was straightforward: corporations would be legally responsible not only for their own operations but for harms occurring throughout their value chains (European Commission, 2023).
Under the weakened version adopted in 2025 (European Council press release on the simplification of sustainability reporting and due diligence requirements, 2025), this principle has been hollowed out. Obligations are largely confined to companies’ own operations, subsidiaries, and direct suppliers. Indirect suppliers, where forced labour, land grabs, toxic dumping, and violent repression most often occur, are effectively placed beyond scrutiny. Thresholds have been raised, drastically reducing the number of companies covered.
This narrowing of scope is decisive. A Cornell University modelling of European supply chains has shown that while a small minority of companies face forced or child labour risks among direct suppliers, the overwhelming majority face such risks in second- and third-tier suppliers. In other words, abuses are concentrated precisely in the upstream segments that the revised directive now sidesteps.
The political message is unmistakable: Europe is unwilling to look where its prosperity is actually made possible.
## Growth as Structural Constraint
To understand this rollback, we must move beyond parliamentary arithmetic. The alliance between conservative and nationalist forces is not an anomaly; it reflects the deeper logic of a system organised around economic growth.
The European economy remains dependent on continuous material expansion. Despite rhetoric about “green growth,” Europe’s resource consumption relies heavily on imported fossil fuels, minerals, agricultural commodities, and manufactured goods. The apparent decoupling of GDP from emissions within Europe is achieved, in part, by outsourcing energy-intensive production and environmental destruction elsewhere.
A robust due diligence regime, one that truly covered entire supply chains, would expose this dependence. It would reveal that cheap consumer goods, renewable technologies, and infrastructure projects are built upon land dispossession, precarious labour, and ecological degradation in the Global South. To regulate supply chains seriously would mean confronting the material basis of European living standards.
This is where degrowth analysis becomes essential. Degrowth is not merely a call for voluntary simplicity or lifestyle change. It is a structural critique of an economic system that requires perpetual expansion.
Degrowth itself is the subject of ongoing debate, both in academic literature and within activist networks such as Degrowth UK.
The main debate concerns whether it should be understood as a research programme, a political project, or a broader social movement. Scholars such as Kallis, Demaria, and D’Alisa (2015) emphasize its role as a scientific and theoretical framework for studying post-growth economies, highlighting how degrowth functions as a research programme and as a vision for socio-economic transformation.
In contrast, activist networks like Degrowth UK (2023) focus on its practical and political dimensions, promoting degrowth as a social movement and a political project aiming to challenge the dominance of GDP growth in contemporary societies. In this sense, degrowth simultaneously operates as a research programme, a social movement, and a political vision.
The weakening of the CS3D is therefore not accidental; it reflects the deeper incompatibility between growth-dependent economic systems and meaningful forms of social and ecological justice.
## Ecological Unequal Exchange
Globalisation did not flatten the world. It reorganised it. Core economies continue to accumulate wealth by appropriating value from peripheral ones through what political economists call unequal exchange. This operates not only through wage differentials but through ecological asymmetries: land, water, minerals, energy, and waste absorption capacity are disproportionately mobilised in the South to sustain consumption in the North.
This dynamic is referred to as ecological unequal exchange, a concept emerging from political ecology and ecological economics, and has been extensively analyzed by Jason Hickel on global resource flows and ecological debt.
GLOBAL SOUTH: Extraction and Production, Mines, Plantations ,Low-wage labor Infrastructures, Click image for a pdf version.
Ecological unequal exchange is measurable. Europe imports vast quantities of embodied labour and embodied emissions through global supply chains. The environmental costs, such as toxic pollution, biodiversity loss, soil degradation, are externalised to regions with weaker regulatory frameworks and less geopolitical leverage.
When the EU narrows its due diligence obligations, it effectively entrenches this structure. By refusing to scrutinise second and third-tier suppliers, it shields the upstream sites of extraction and exploitation from meaningful accountability. The burden of proof remains on communities with the least power.
The language of “competitiveness” used to justify the rollback is revealing. Competitiveness means maintaining cost advantages. Cost advantages depend on accessing cheap labour and cheap nature. Any regulatory framework that seriously disrupts this logic is framed as a threat to European prosperity.
## The Case of the East African Crude Oil Pipeline
The dynamics of ecological imperialism are visible in concrete projects. The East African Crude Oil Pipeline (EACOP), led by TotalEnergies, exemplifies the contradictions at stake.
The pipeline, stretching approximately 1,443 kilometres from Uganda to Tanzania, is designed to transport over 200,000 barrels of crude oil per day. It has already displaced tens of thousands of people, disrupted agricultural livelihoods, and threatened sensitive ecosystems, including protected areas and wetlands. The project is projected to generate tens of millions of tonnes of CO₂ annually, emissions that will overwhelmingly benefit consumers and shareholders far from the affected territories.
Local resistance has been met with repression. Students and activists mobilising against the pipeline have faced arrests and intimidation. Communities challenging land acquisition processes have encountered legal and administrative obstacles that reflect profound power asymmetries (Human Rights Watch, 2026; The Guardian, 2023).
In France, civil society organisations invoked the 2017 duty of vigilance law to challenge TotalEnergies in court. In October 2025, a Paris court ruled that the company had engaged in misleading commercial practices by presenting itself as a major actor in the energy transition while continuing fossil fuel expansion (Climate Integrity, 2025). The ruling marked a rare moment of institutional accountability.
Yet such victories remain fragile. A strong EU-wide due diligence directive could have reinforced these national legal tools and extended their reach across supply chains. Instead, the diluted CS3D risks harmonising downward, setting a ceiling rather than a floor for corporate responsibility.
By weakening due diligence at the European level, policymakers effectively grant continued legitimacy to projects like EACOP; so long as they are framed as economically strategic.
## Regulation Without Transformation?
None of this means that legal tools are irrelevant. On the contrary, they can create leverage, expose abuses, and shift public discourse. But regulation within a growth-dependent system faces structural limits.
As long as European prosperity is tied to high material throughput, externalised environmental costs, and profit-maximising corporate structures, due diligence will remain contested and reversible. Each economic downturn or geopolitical crisis will generate renewed calls to suspend or weaken social and environmental standards in the name of stability.
Degrowth and ecosocialism challenge this cycle at its root. They argue that justice requires planned reduction of material and energy use in the Global North, democratic control over production, and reparative redistribution between North and South. This implies shortening supply chains, reducing unnecessary production, prioritising care and public goods over accumulation, and confronting imperial trade relations.
Without such transformation, due diligence risks becoming a technical fix applied to a structurally extractive system.
## A Political Crossroads
The EU could have used the CS3D to signal a break with corporate impunity and ecological imperialism. Instead, it chose to protect competitiveness. This choice reflects not only the rise of right-wing forces but the deeper hegemony of growth as an unquestioned objective.
The question is therefore not simply when corporations will be held accountable. It is whether European societies are willing to reconsider the material foundations of their wealth.
If growth requires sacrifice zones, then justice requires contraction, at least in the economies that have benefited most from centuries of extraction. Degrowth is not a utopian add-on to regulatory reform. It is the political horizon that makes genuine accountability conceivable.
Until Europe confronts its dependence on unequal exchange, each regulatory advance will remain vulnerable to rollback. The weakening of corporate due diligence is not an aberration. It is a reminder that without systemic transformation, the protection of people and ecosystems will always come second to the protection of accumulation.
_____________________________________________
*Alice Puerto is currently a student in the Master’s in Degrowth at the Universitat Autònoma de Barcelona (UAB). Prior to joining this specialised programme, she studied economics in preparatory classes in France before continuing her studies at Emlyon Business School. Her academic interests focus on the political economy of degrowth, with particular attention to feminist perspectives. She is currently writing her thesis on feminist approaches to degrowth, exploring the connections between capitalism, global extraction, and gendered forms of inequality.
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