The European Union has taken a decisive step to scale back its landmark sustainability and due diligence regulations, a move that could have far-reaching implications for African economies increasingly aligned with responsible trade and ESG reporting.
On Monday (23rd June 2025), the European Council, representing EU member states, adopted a negotiating position on the bloc’s so-called Omnibus proposal, which includes significant changes to corporate sustainability rules. In particular, the Council endorsed sweeping reductions to the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD), both of which had originally been designed to hold companies accountable for environmental and human rights impacts across global supply chains.
The Council’s position would significantly shrink the number of companies required to comply with the directives. The threshold for CSDDD compliance would rise to firms with at least 5,000 employees and €1.5 billion in revenue, up from the previous 500-employee mark initially proposed. This change would exclude a vast majority of European firms from due diligence obligations, many of which source goods and services from developing economies, including Africa.
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The CSRD threshold was also adjusted, maintaining the Commission’s earlier proposal of 1,000 employees but adding a new €450 million revenue bar. That combination would eliminate thousands of firms from sustainability reporting requirements. A review clause was added, allowing future reassessment based on data needs, the EU Green Deal, and company readiness.
Officials say the changes are meant to reduce administrative burdens and protect smaller businesses from regulatory spillovers. “We are taking a decisive step towards our common goal to create a more favorable business environment to help our companies grow, innovate, and create quality jobs,” said Adam Szłapka, Poland’s Minister for the EU, following the Council meeting.
In Africa, where European companies are deeply embedded in key industries such as agriculture, textiles, and extractives, the shift is being closely scrutinized. For years, ESG-focused directives from Europe have spurred African exporters to adopt stronger sustainability practices, driven by pressure from international buyers seeking to comply with EU laws. With those laws now weakened, many fear that momentum could stall.
African sustainability experts say the rollback may reverse hard-won gains in ethical sourcing, transparency, and climate action. Smaller African exporters, particularly in sectors like cocoa, cotton, and rare earth minerals, often rely on strong ESG partnerships with European buyers to remain competitive and access green finance. Reduced oversight from Europe could create a fragmented reporting environment and allow questionable practices to return unchecked.
The timing also raises climate concerns. The Council has proposed pushing the deadline for implementing the due diligence directive to July 2028 and softening requirements for climate transition plans. Companies would no longer be obligated to immediately act on such plans and could delay adoption by up to two years.
This retreat comes just as many African nations are ramping up their own ESG frameworks. South Africa and Nigeria have introduced mandatory sustainability disclosure rules; Kenya and Ghana are piloting green finance taxonomies; and regional trade blocs have begun exploring ESG alignment under the African Continental Free Trade Area (AfCFTA).
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Observers say Africa must now determine whether it will follow the EU’s lead or forge a stronger, homegrown path toward responsible business. While the EU Parliament still needs to present its position before final negotiations begin, the Council’s stance signals a turning point in global ESG regulation—one that Africa cannot afford to ignore.
In the absence of consistent global standards, some African institutions are already preparing to fill the gap. Regional stock exchanges, development banks, and ESG certifiers are pushing for greater digital reporting, supply chain audits, and green financing metrics. But for those relying on EU markets and investors, uncertainty looms.
As global ESG frameworks are redrawn, the burden of ethical leadership may shift southward. Africa’s ability to protect its people, resources, and economic credibility will depend not just on international rules—but on its own resolve to uphold and enforce sustainable trade principles.
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