On September 19, 2024, the U.S. House of Representatives approved a comprehensive investor reform package that includes a provision requiring the SEC to report on the effects of the EU's corporate sustainability directives on U.S. companies, consumers, and investors. This provision, authored by Rep. Dan Meuser (R-PA), is part of the Prioritizing Economic Growth Over Woke Policies Act, H.R. 4790, sponsored by Rep. Bill Huizenga (R-MI) [19da11d8].
Meuser's legislation addresses the EU's Corporate Sustainability Due Diligence Directive (CSDDD), which he claims imposes burdensome regulations on U.S. businesses and threatens economic sovereignty. He emphasized that Republicans support ESG as an investment choice but oppose mandated compliance with political ideologies over profitability [19da11d8].
Germany's Supply Chain Care Act, which became law on January 1, 2023, requires German companies to investigate their suppliers and ensure they are not engaging in behavior contrary to human rights. The European Union passed its own Supply Chain Act on March 15, 2024, which all 27 Member States have two years to implement. The Act is flanked by the Deforestation in Supply Chains Regulation, which stipulates that agricultural products must come from areas free of deforestation. The E.U. Supply Chain Act will have a significant impact on the coffee industry, as only 20 percent of coffee farmers globally are compliant with the E.U. regulation. The German Coffee Association warns of coffee shortages and significant price increases. The entire supply chain, including production, transport, and disposal, is affected by the Act. The E.U.'s attitude has been criticized for having a subtle colonial overtone, as small farmers may be locked out of the market due to difficulties in establishing traceability. Compliance with the Act also extends to shipping, requiring fair working conditions for sailors and traceability of products. The E.U. Supply Chain Act applies to companies with 250 or more employees and 40 million euros of revenue in the E.U., or companies outside the E.U. with 150 million euros of revenue, of which 40 million is from the E.U. The E.U. has set up a Whistleblower Hotline for reporting non-compliance [d38d9ed2].
The EU Council has adopted the corporate sustainability due diligence directive, imposing obligations on large companies to monitor, prevent, and remedy human rights and environmental damages. The directive will apply to companies with more than 1,000 employees and a turnover exceeding €450 million. Key requirements include ensuring that human rights and environmental obligations are respected throughout the entire chain of activities. Companies will be held liable for any damage caused and will be required to provide full compensation. The directive will enter into force on the twentieth day following its publication, and member states will have two years to implement the necessary regulations and administrative procedures to comply with the directive [357f6ce8].
The EU's efforts to enforce human rights in business practices and promote corporate sustainability align with its broader goals outlined in the European Green Deal. The European Green Deal is a comprehensive growth strategy aimed at transforming the EU into a fair and prosperous society with a modern, resource-efficient, and competitive economy. It encompasses measures to reduce greenhouse gas emissions, promote clean energy, protect biodiversity, and ensure a just transition for workers and regions affected by the shift towards a sustainable economy [588c55b3].
To support the transition to a green economy, the European Commission aims to mobilize at least €1 trillion in investments over the next decade. These investments will be directed towards projects and initiatives that promote sustainability, innovation, and the development of green technologies [588c55b3].
The EU's commitment to a just and inclusive future of living well within planetary boundaries is also reflected in its policy framework, including the European Pillar of Social Rights. This framework provides guiding principles for just sustainability transitions and highlights the importance of restorative justice in addressing past harm. The European Environment Agency (EEA) will use this framework to develop recommendations for just sustainability transition policies that 'leave no one behind' [39db7f40].
The EU's pursuit of sustainability and the enforcement of human rights in business practices are complex endeavors that require addressing multiple challenges and striking a balance between various objectives. Incorporating the preferences of Eurois and understanding the dynamics of labor markets will be essential in shaping effective policies and strategies for a sustainable future [e96fc150] [ddfadd23] [047907b7] [cbf743d4].
On May 15, 2024, the Expert Session on Human Rights Due Diligence (HRDD) featured experts from PepsiCo and Unilever discussing the critical role of HRDD in today's regulatory landscape and the importance of collaboration. The session emphasized the positive impact of collaboration in achieving a remedy and provided actionable insights and strategies for advancing HRDD practices. The session is part of the Expert Series initiative by the Consumer Goods Forum, which aims to mobilize member action in five areas: employee health and well-being, human rights in supply chains, packaging circularity, deforestation-free supply chains, and decarbonization [5e5fff3b].
The World Union of Consumer Rights Advocates has issued a statement expressing concerns about the impact of the EU Supply Chain Act on consumers. The statement highlights the need for stronger regulations to protect consumers from the negative effects of the Act. The World Union of Consumer Rights Advocates calls for increased transparency and accountability from companies involved in the supply chain. They also emphasize the importance of educating consumers about the risks and potential harm associated with the Act. The statement urges governments and regulatory bodies to take action to address these issues and ensure the well-being of consumers [d4e48f6f].