Human Lives Human Rights: The European Union’s proposed ‘Omnibus Simplification Package’ poses a risk of undermining the Corporate Sustainability Due Diligence Directive (CSDDD), which could delay advancements in corporate accountability, the combat against modern slavery, and protections for human rights. The proposed ‘Omnibus Simplification Package’ by the European Commission represents a notable threat to the CSDDD. Ursula von der Leyen, the President of the European Commission, has proposed merging the CSDDD with other sustainability regulations into a singular ‘Omnibus’ package to facilitate the legislative process. However, this could jeopardize years of progress made in addressing modern slavery and enhancing corporate accountability.
The CSDDD has encountered considerable resistance from right-wing politicians and business lobbyists, who might leverage the Omnibus process to dilute or obstruct important provisions. The legislation was set to come into effect in July 2024 after extended discussions, but there is now a danger it could be weakened or entirely scrapped. Business leaders and financial experts caution that the ongoing uncertainty surrounding legislation hinders responsible planning and action. In the absence of robust due diligence laws, vulnerable workers worldwide will continue to face exploitation without consequences.
The proposed changes to EU sustainability regulations significantly undermine corporate accountability. The omnibus proposal aims to simplify three laws to streamline essential aspects of the regulations. The modifications would include the Corporate Sustainability Due Diligence Directive (CSDDD), which mandates companies to identify, prevent, and mitigate human rights and environmental risks within their supply chains through regular due diligence. Under the new provisions, only companies with more than 1,000 employees and a turnover of €450 million would be obligated to comply, whereas previously compliance was required for firms with as few as 50 employees and a turnover of €8 million. Due diligence would now apply exclusively to direct suppliers, rather than encompassing indirect suppliers as well. Companies would not be compelled to sever ties with non-compliant suppliers, and due diligence checks would be conducted every five years rather than annually. Civil liability associated with non-compliance would be eliminated, and implementation timelines would be postponed by two years, moving the effective date to 2028. These alterations would erode environmental and human rights standards within the supply chain.
In addition, the Corporate Sustainability Reporting Directive (CSRD) seeks to standardize sustainability reporting by requiring companies to adhere to European Sustainability Reporting Standards (ESRS) to improve transparency and comparability. However, approximately 80% of companies would be exempted from the scope of the CSRD, and sector-specific reporting standards would be removed. The European Sustainability Reporting Standards (ESRS) would be revised to lessen the number of mandatory data points. The principle of double materiality, which requires companies to report their exposure to climate risk and their environmental impact, would still be maintained.
Moreover, the EU Taxonomy establishes a classification system aimed at defining environmentally sustainable economic activities and directing investment towards sustainable business practices. Under the proposed changes, up to 85% of companies would no longer be obligated to disclose whether they align with the EU’s classification of sustainable activities. Instead, a system allowing companies to voluntarily disclose such alignment would be instituted.
European leaders hold the responsibility to uphold human rights and foster sustainable development. With global supply chains becoming increasingly intricate, the need for robust regulations to address modern slavery and environmental degradation has never been clearer. The CSDDD presents a vital opportunity to establish an international benchmark for corporate responsibility. Failing to maintain corporate accountability could have lasting repercussions, not only for vulnerable workers but also for the EU’s standing as a global advocate for human rights. This reality underscores a scenario where forced labor and other human rights violations can persist as low-risk enterprises for business leaders lacking ethical considerations.
Ensuring the effective enforcement of the CSDDD is crucial to guaranteeing that companies uphold human rights and mitigate modern slavery risks within their supply chains. According to the latest Global Slavery Index, 27.6 million people around the world are subjected to forced labor, highlighting the urgent need for businesses to prioritize human rights. G20 nations account for 75% of global trade, importing nearly half a trillion dollars annually worth of goods potentially produced with forced labor.
Businesses require legal certainty to take decisive and effective actions toward addressing human rights and environmental issues within their operational frameworks and supply chains. By significantly diluting the CSDDD and CSRD, the European Union is failing vulnerable workers worldwide, as there would be no obligation to end partnerships where abuses are identified. What could have been a transformative moment for human rights has instead turned into a regrettable setback, disadvantaging both workers and businesses. The original directive held the potential to enact a momentous shift in accountability for corporate practices in supply chains, particularly for large companies based in the EU.
