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Fair trade organizations warn that EU plans to simplify regulations could increase burdens and weaken due diligence.
Fair trade organizations with more than 6,000 members have expressed fears about the European Union's plans to streamline regulations, saying the proposals could result in "unintended consequences" and put more burdens on businesses without adequate benefits.
Last month, the European Commission adopted the first 'omnibus package' to reduce red tape and streamline EU rules to increase competitiveness. Part of this package are amendments to sustainability reporting and due diligence. But organizations such as the sustainable trade association Amfori, the textiles coalition Cascale, and others are calling on policymakers to make sure that these simplification efforts do not weaken due diligence provisions, especially in the framework of international standards for responsible business conduct.
The collective statement from these groups contended that the proposed scheme would make it more complicated to manage risk and add costs for companies but deliver limited advantages to supply chain workers. "We consider the current proposal to introduce unintended consequences to risk management with increased unpredictability and complexity, risking higher corporate burden and cost," the statement says.
Amfori, Cascale, and others have urged the EU to drop proposals that would limit due diligence requirements to direct suppliers alone, since risks in supply chains tend to go beyond direct suppliers. They also called for harmonized enforcement to prevent a patchwork of legislation.
In addition, the associations stressed that there needs to be certainty on the corporate sustainability reporting directive (CSRD) since limiting its scope could exclude 80% of businesses that are currently within it.
The European Commission aims to lower administrative burdens by 25-35% by 2029. Yet, fair trade associations have expressed concerns that such simplifications need to be properly tailored to international standards to prevent undermining due diligence or protections of workers.
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