EU risking human rights progress by weakening Corporate Sustainability Due Diligence Directive
The European Union’s proposed ‘Omnibus Simplification Package’ threatens to weaken the Corporate Sustainability Due Diligence Directive, potentially delaying progress on corporate accountability, the fight against modern slavery, and human rights protections.
The European Commission’s proposed ‘Omnibus Simplification Package’ is a significant threat to the Corporate Sustainability Due Diligence Directive (CSDDD).
President of the European Commission Ursula von der Leyen has suggested combining the CSDDD with other sustainability regulations into a single ‘Omnibus’ package to simplify the legislative process.
This could undermine years of progress in tackling modern slavery and advancing corporate accountability.
The CSDDD has faced significant opposition from right-wing politicians and business lobbyists, who may use the Omnibus process to weaken or block crucial elements.
After years of negotiations, this legislation came into force in July 2024. However, it now risks being weakened or abandoned.
Businesses and financial experts warn that ongoing legislative uncertainty prevents responsible planning and action.
Without strong due diligence laws, vulnerable workers globally will continue to be exploited with impunity.
Proposed major changes to EU sustainability regulations weaken corporate accountability
The EU omnibus proposal aims to simplify 3 laws to streamline key parts of the regulations. The changes would include:
Corporate Sustainability Due Diligence Directive (CSDDD)
Requires companies to identify, prevent, and mitigate human rights and environmental risks in their supply chains through regular due diligence.
• Companies with more than 1,000 employees and €450 million turnover would need to comply (previously as few as 50 employees and €8 million turnover).
• Due diligence now applies only to direct suppliers, previously covering indirect suppliers as well.
• Companies would no longer be required to terminate relationships with non-compliant suppliers.
• Due diligence checks would be required every 5 years instead of annually.
• Civil liability would be removed.
• Implementation would be postponed by 2 years, until 2028.
These new rules would water down environmental and human rights supply chain standards.
Corporate Sustainability Reporting Directive (CSRD)
Standardises sustainability reporting by requiring companies to follow European Sustainability Reporting Standards (ESRS) for greater transparency and comparability.
• Around 80% of companies would be removed from the scope of CSRD.
• Sector-specific reporting standards would be deleted.
• The European Sustainability Reporting Standards (ESRS) would be revised, reducing the number of required data points.
• The concept of double materiality remains. Companies must still report on both their exposure to climate risk and their impact on the environment.
EU Taxonomy
Establishes a classification system to define environmentally sustainable economic activities and direct investment towards sustainable business practices.
• Up to 85% of companies would no longer be required to report on whether they align with the EU’s list of environmentally sustainable activities.
• Instead, an opt-in system would allow companies to voluntarily disclose their alignment.
The EU’s responsibility to uphold corporate accountability and combat exploitation in global supply chains
European leaders have a responsibility to protect human rights and ensure sustainable development.
As global supply chains become increasingly complex, stronger regulations are needed to address modern slavery and environmental harm.
The CSDDD remains a critical opportunity to set a global standard for corporate responsibility.
Failure to uphold corporate accountability will have long-term consequences, not only for vulnerable workers but also for the EU’s credibility as a global leader in human rights.
This means forced labour and other human rights abuses remain a low-risk activity for business leaders without a conscience.
Ensuring effective enforcement of the CSDDD to prevent modern slavery and human rights violations
Effective enforcement of the CSDDD is essential to ensuring businesses uphold human rights and prevent modern slavery in their supply chains.
27.6 million people globally are subjected to forced labour according to the latest Global Slavery Index, highlighting the urgent need for businesses to uphold human rights.
G20 countries account for 75% of global trade, importing nearly half a trillion dollars’ worth of goods at risk of being made with forced labour annually.
Businesses need legal certainty to take meaningful and effective action towards addressing human rights and environmental concerns within their operations and supply chains.
By severely watering down the CSDDD and CSRD, the European Union is failing vulnerable workers worldwide, as there is no duty to terminate relationships where abuse is recognised.
What could have been a pivotal moment for human rights has turned into a disappointing setback, disadvantaging both workers and companies.
The original directive had the potential to create a significant shift in accountability for business practices in supply chains, particularly for large EU-based companies.
