Recent environmental relaxations in the EU pose challenges but are unlikely to reverse sustainability advancements. While the European Commission’s omnibus bill aims to simplify regulations, experts worry it may weaken compliance mechanisms, particularly affecting the CS3D directive on human rights and environmental standards. Despite concerns, industry leaders see potential opportunities, as multinationals still value sustainable sourcing. Enforcement of stringent regulations like the anti-deforestation law continues, indicating that not all environmental commitments are being relaxed.
While the recent environmental relaxations within the European Union present a notable challenge, they are not likely to undo the advancements achieved over the past few years. This perspective is shared by auditors and certifiers, who play a crucial role in guiding companies through their transition towards sustainability.
In late February, the European Commission unveiled its omnibus bill, a collection of initiatives aimed at streamlining social and environmental regulations for businesses, which received praise from employer organizations, particularly in France.
However, some certification experts—firms dedicated to aiding companies in meeting environmental and social regulations—express concerns that the Commission’s proposals are poorly designed and potentially harmful in the short term.
“We have diminished the effectiveness of the CS3D,” laments Pierre-François Thaler, co-founder of EcoVadis, a leading French firm specializing in corporate social responsibility (CSR) related to supply chains.
The CS3D directive, which mandates that European companies ensure their suppliers and subcontractors adhere to minimum standards for human rights and environmental compliance, is among those targeted for simplification.
Understanding the ‘Discrepancy’
Pierre-François Thaler points out that “some changes proposed by the omnibus bill could be quite harmful.” He highlights a particular clause that restricts large companies from asking certain questions of their suppliers with fewer than 500 employees.
In essence, large businesses are being told they have obligations, yet they are simultaneously restricted from verifying compliance, placing them in a challenging position, he explains.
The sentiments are echoed by Tilkal, a French firm focused on supply chain traceability. Co-founder Matthieu Hug states, “The omnibus effect introduces uncertain challenges,” expressing concern that companies may choose to delay action until Parliament finalizes the project.
He emphasizes the multitude of risks present in supply chains, including issues like child labor—currently affecting 150 million children globally—forced labor, environmental degradation, deforestation, and pollution.
The shifting landscape in the United States has altered the game, with the country stepping back from commitments such as the Paris climate agreement and prioritizing fossil fuel initiatives. Significant American banks have pulled out of the net-zero banking alliance, with fund managers following suit.
“There has been a significant disparity in perception between European regulations and those in other regions around the world,” comments Olivier Attias, a partner at the law firm August Debouzy.
Opportunities Amidst Challenges
Despite the concerns, industry experts suggest that not all indicators are negative in Europe. Pierre-François Thaler argues that multinationals recognize the benefits of sustainable sourcing.
“Some large American clients have expressed that even as the U.S. rolls back commitments, they are pleased to reference European regulations to support their responsible sourcing initiatives,” he affirms.
According to the Spanish auditing firm Aenor, there has been no observed decline in companies’ dedication to environmental objectives.
“The competitiveness of the European economic sphere greatly depends on a commitment to values like sustainable development, which define Europe,” they noted in correspondence with AFP.
Moreover, Matthieu Hug reassures that not all regulations are being relaxed. “Perhaps the European Commission introduced these changes to appease companies resistant to the Green Deal,” he suggests.
He also highlights the continued enforcement of the European regulation against deforestation and forest degradation (RDUE), which remains significantly stringent.