How weakening due diligence EU rules turned a ‘betrayal’ for workers

The proposed rollback of the EU’s corporate accountability rules will significantly weaken their ability to address labour violations within the EU, experts and labour union representatives told EUobserver. 

Aída Ponce del Castillo, senior researcher at the research centre the European Trade Union Institute (ETUI), told EUobserver that workers in labour-intensive industries and those at the bottom of subcontracting supply chains will be most impacted. 

Workers’ representatives said that impacts on workers in the EU’s garment, agricultural, transport, and industrial sectors will be especially significant. They argued that the rollback could mean a failure to address abuses including excessive working hours, forced labour, dangerous working conditions, and poverty wages.  

While the proposed Omnibus bills by the European Council, Commission, and Parliament differ, each proposal contains rollbacks to the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD). 

Both directives incorporate labour rights in their understanding of social impacts.

Andreas Rasche, professor at Copenhagen Business School, told EUobserver that the rollback has major impacts on workers in the EU, despite most focus being spent on distant impacts. 

“A lot of people perceive due diligence primarily to relate to global supply chains and not something within Europe. But we also have sweatshops in Europe,” he said.

‘A full betrayal of garment workers’

Paul Roeland, a campaigner at Amsterdam-based NGO Clean Clothes Campaign, told EUobserver that the European Parliament’s proposed minimal employee threshold (5,000 employees) for the CSDDD would exclude some of the largest EU clothing brands. 

“Most of the concrete violations we have been working on in the past years would fall outside the scope,” Roeland said. “This includes many of the recent violations inside the EU as well, such as various scandals in the Italian luxury sector and production in South-Eastern Europe”. 

This refers to recent investigations resulting in several high-end clothing brands being placed under special supervision in Italy for alleged labour violations within their supply chains. In one case, subcontractors were found paying workers on a per-piece basis that resulted in net hourly wages between €2.75 to just above three euros.  

“We qualify this latest proposal as a full betrayal of garment workers,” Roeland also said. 

Weakening deeper supply chain impacts

One expected change in the European Parliament’s compromise text for the Omnibus is its reintroduction of a ‘risk-based’ approach to due diligence in the CSDDD.  

Johannes Blankenbach from the Business & Human Rights Resource Centre (BHRRC), a global NGO focused on Business and Human Rights, said that “this asks companies to really look in their full supply chains on where the most severe and most likely human rights or environmental risks are and then first take action there.”

In the Commission and Council proposals, companies would only be obliged to conduct due diligence on their direct (tier-1) business partners, meaning that abuses further down in supply chains would not be covered. 

Agathe Smyth, Senior Policy Officer for the European Transport Workers’ Federation (ETF) said this tier-1 rule could obscure abuses of transport workers since they are often at the end of long supply chains with multiple levels of subcontracting. 

Smyth says this would risk missing abuses that the ETF has observed in the sector, including workers being paid less than promised, cases of forced labour, and migrant workers being given false promises and forced to pay off debts for large recruitment fees. 

Deputy General Secretary of IndustriALL-Europe Isabelle Barthès told EUobserver that shallow due diligence risks missing the most flagrant labour violations, “In all industries, the further down you go in the value chain, the more likely you are going to see a business model that is based on labour costs. Where this is the case, you’re more likely to see abuses and low wages.”

Among the proposed changes to the CSRD is a limit on the information that companies can request from smaller companies within their supply chains, which William Eddershaw from the European Federation of Food Agricultural and Tourism Trade Unions (EFFAT) said impacts franchise workers. 

“This would mean that the franchisor would be limited or prevented from requesting information on working policies and conditions from individual franchise stores, as well as their supply chains,” he said. “This would allow the franchisor to largely ignore inherent risks of labour violations across the franchise networks they operate”.

27 civil liability regimes

The proposed rollbacks in the EP’s compromise include removing an EU-wide civil liability regime in the CSDDD, which would have created a common standard for due diligence violations and held violators to account in EU courts. 

Professor Rasche said that instead of a single harmonised regime, this would result in 27 different regimes and increase complexity. 

This comes amid efforts to establish a so-called ‘28th regime’ of rules for innovative companies which critics argue presents a threat to labour rights since companies could choose to follow more lenient laws under this regime, rather than national rules. 

Smyth added that for transport workers, eliminating an EU-wide system could result in jurisdiction issues given their high mobility across borders. She added that it may result in a highly unequal system given that some member states have weaker civil liability regimes.

Blankenbach from the BHRRC said that the CSDDD would use the leverage of companies at the top of supply chains to push for real accountability, even where there are potentially weaker enforcement systems.

“Holding these firms accountable can tackle root causes of abuse and lead to real improvements for rightsholders and victims where local accountability – let’s say labour inspections on tomato plantations – fails, even within the EU.”

According to Deputy General Secretary of IndustriALL-Europe Isabelle Barthès, “The impact of the Omnibus on workers has really been neglected, and the focus has always been on outside of European boundaries”.