Could the European Union further dilute its mandatory due diligence laws before they’ve barely begun?
That’s one concern being raised following the European Commission’s announcement earlier this month that it was preparing to “streamline” its sustainability regulations through a so-called omnibus simplification package to be published in February.
While the idea, according to President Ursula von der Leyen, is to strip away redundant and “often overlapping” reporting requirements and ease the regulatory burden being imposed on businesses, several center-left Members of the European Parliament say it could result in a potential rollback of hard-won efforts to pass an already-watered-down version of the corporate sustainability due diligence directive, which together with the corporate sustainability reporting directive and a “taxonomy” that defines criteria for sustainable economic activities, would be among the regulations being rejiggered.
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“We firmly ask that you exclude the very recently agreed CSDDD from this exercise,” democratic-socialist politicians Iratxe García Pérez, Ana Catarina Mendes, René Repasi and Lara Wolters wrote in a letter obtained by Euronews. Their support for von der Leyen’s second term, they said, was predicated on “assurances provided through those commitments…that the essential substantive elements of EU reporting legislation should in no case be altered, and that simplification will not amount to deregulation.”
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The Clean Clothes Campaign, the garment industry’s largest consortium of trade unions and organizations, also expressed what it said was its “deep worry” that simplified rules would result in a U-turn on the world’s largest single market’s landmark legislation. It also said that the European Commission misunderstood what appears to be one of the inciting factors for the decision: a September report by Italian economist and former European Central Bank president Mario Draghi on Europe’s eroded competitiveness that, despite being mentioned several times by von der Leyen in her remarks about the omnibus, makes only “cursory reference” to the due diligence framework.
“Moreover, Mr. Draghi’s criticism takes place in an environment where corporate investments have remained low while corporate profits have continued to increase, having been funneled into shareholders’ pockets more than into investments in Europe’s productive capacity,” the Clean Clothes Campaign said. “In short, Mr. Draghi’s analysis and its translation into policy action by the current commission seem to be used as a pretext to sacrifice labor and human rights as well as environmental sustainability in the name of corporate profits. Mr. Draghi’s diagnosis of the EU economy’s ills is grounded, but his prescription points to more of the same medicine.”
Simplification, the organization said, “cannot and should not be an end in itself.” Instead, it must serve the Green Deal’s goal of achieving a “just, fair and sustainable economy,” especially for the workers making the clothes sold throughout the 27-member bloc. For them, it said, regulating the supply chains of large brands and manufacturers is a “question of survival.”
“Corporate due diligence and sustainability reporting obligations exist in a view to ensure companies’ respect for human rights and the environment, which should remain the guiding principle of the commissioner’s actions,” the Clean Clothes Campaign added. “The commission’s attention should move from simplifying regulation to stimulating investments in public goods, including social protection and the transformation of the EU economy toward one that is sustainable for workers and the planet.”
With this past summer’s elections nudging Europe’s leadership to the right amid a growing backlash against rules and targets that corporate interests have deemed an overreach or far too onerous, the EU has already begun to delay or scale back plans to slash emissions and protect nature. Reached for comment, a European Commission spokesperson would only say that internal discussions are “currently ongoing” about the scope and content of an omnibus simplification proposal.
But Alexander Kohnstamm, executive director of the Fair Wear Foundation, a multistakeholder organization based in Amsterdam, said that rolling back good regulation that businesses have already begun working on would be a “bad idea.”
“Business needs clarity, and this is the opposite,” he said. “Rather than rearranging regulatory landscapes, policymakers should focus on working with industry, unions and civil society to create clear and effective sector guidelines for implementation and accountability. As the sector specialists on practical and impactful human rights due diligence, we know what’s needed to ensure that implementation and accountability make sense in practice and deliver real value for workers.”