Ursula von der Leyen’s commission has just signalled that it is shifting towards a Trump-influenced deregulatory agenda that prioritises market freedoms over public interest.
Through Wednesday's (26 February) 'Omnibus' reforms of recently-agreed legal directives and regulations, the commission is dismantling vital safeguards and in so doing will deepen inequality in Europe and beyond and apply convenient myopia to the accelerating climate crisis.
In these new turbulent times, ironies abound.
It was von der Leyen’s previous commission that championed forward-thinking business regulations — the sustainable finance framework. These agreed EU laws support markets and companies to accelerate growth to deliver our green economies of the future — where new, well-paid jobs, clean tech, cheap and secure energy are created, and human rights are respected.
They require companies to report on their efforts and act to reduce environmental harm and uphold workers and communities’ rights — not just in their own operations, but across the global supply chains that produce the food we eat, the clothes we wear and the technology we use.
The new commission’s proposals are now for these essential protections to be effectively scrapped, in
all but name.
Von der Leyen’s commission’s ‘Omnibus simplification package’ is a proposed act of economic vandalism on Europe’s long-term prospects for growth, competitiveness and sustainability.
The new commissioners have closed their ears to 140 responsible investors, and responsible business associations representing, together, more than 6,000 businesses, large and small.
The commission has selectively listened to old oil and gas companies and backward-looking business associations
These leading investors and companies had called for implementation of the new directive, sustained legal certainty, and smart regulation to help responsible business navigate action on climate and inequality.
Instead, the commission has selectively listened to old oil and gas companies and backward-looking business associations.
As the US administration implements wrong-headed policies to maximise short term returns, promote financial speculation, and narrow economic nationalism, Europe must take a different path. The commission, member states, and parliamentarians must hold their nerve.
The opportunity is not just to resist deregulation, but to lead: to direct markets towards long-term value creation and shared economic prosperity. The United Nations and the OECD have set the standards for this approach — one that strengthens the standing of Europe and offers investors and companies the legal certainty and rule of law they need.
The commission’s attempt to eviscerate these sustainability laws must not be agreed by the European Parliament and by the member states.
Responsible investors, banks and companies will join with citizens’ groups across Europe to insist that all the core aspects of the laws are maintained, including:
Firstly, the Corporate Sustainability Due Diligence Directive (CSDDD) must have teeth (civil liability) otherwise reckless companies will ignore it.
Next, the CSDDD as well as the Corporate Sustainability Reporting Directive (CSRD) must include reporting and protections for workers and communities within brands’ full supply chains.
Finally, they must cover a critical mass of companies in order to have a systemic impact and humanise markets.
The new commission proposes to scrap civil liability for companies that abuse workers and communities. For responsible business, that immediately tilts the playing field in favour of irresponsible business, allowing it, with impunity, to keep polluting and retain forced and child labour in their supply chains.
As the CSDDD’s original architect, EU commissioner Didier Reynders said, regulation without penalties is no regulation.
The new Commission insists that corporations’ human rights and environmental risk assessment focuses on ‘Tier 1’ of supply chains (their immediate suppliers).
This contravenes international business standards, ignores all evidence that the most egregious abuses are conveniently buried below brands’ Tier 1, fuels tick-box approaches rather than smart measures; and once again, disadvantages and disincentivises responsible business that continues to identify and expunge the most severe human rights risks, wherever they are in their supply chains.
The commission seeks to limit the number of businesses that report to only the very largest, and to drastically reduce reporting requirements. Ask any responsible investor what they need to make high-quality judgements about how to invest sustainably and they will say: up-to-date meaningful reporting from across the large portfolio of companies that they are invested in.
That is why so many investors have spoken in support of these sustainability laws. They need this information to make the right investments for our future growth and prosperity.
The arguments from irresponsible business and unscrupulous politicians against these laws, such as ‘regulation stymies growth’ are self-serving fallacies.
All the evidence is that smart regulation stimulates and rewards innovations — creating profit and enhancing workers’ and communities’ welfare.
Today the choice is stark. Is Europe to lead the world in investment and business practice that delivers greater shared prosperity, responsible business, and tackles the climate crisis? Or will it continue with the failed business-as-usual model driving unsustainable inequality and environmental crisis?
The second option is the one that has delivered the fear and uncertainty driving the rise of authoritarianism in Europe. To continue with it is folly.
Across Europe, efforts must now be re-ignited to hold onto the key achievements of the sustainable finance framework. This is not a bureaucratic battle; this is a fight to humanise our economies and address the ecological crisis engulfing our planet.
Mary Robinson is the former UN High Commissioner for Human Rights and ex-president of Ireland. Phil Bloomer is chief executive of The Business & Human Rights Resource Centre.
Mary Robinson is the former UN High Commissioner for Human Rights and ex-president of Ireland. Phil Bloomer is chief executive of The Business & Human Rights Resource Centre.