Germany's new chancellor, Friedrich Merz, calls for the repeal of the CSDDD

Germany's new chancellor, Friedrich Merz, called for the repeal of the CSDDD during his inaugural visit to the European Commission on May 9, 2025. German public television quoted him as follows: “The permanent solution to this problem must be to simply repeal this Directive, as we will do with the German Supply Chain Act in the near future.” The three parties forming the new German Government informed the public a month ago that they intend to abolish the German Supply Chain Act's reporting obligation immediately and to instruct the responsible regulator not to sanction most acts of non-compliance with the Act's compliance obligations.

The statement by Chancellor Merz adds another question mark to a cornerstone of the EU's ESG legislation. While the CSRD and CS3D have already been postponed by one year, the European Parliament is currently discussing the substantive changes proposed by the European Commission in its Omnibus Proposal. The European People's Party (EPP) within the European Parliament (two of the three parties of the new German Government, including Mr. Merz's party, are members of the EPP) is likely to follow-up on this development. However, the Socialist and Democratic parties in the European Parliament can be expected to bitterly defend the CS3D. The concerns raised in the U.S. (and in other jurisdictions) about the extraterritorial effects of the CS3D will further influence the discussions about the CS3D's fate.