How Does EU’s “Deregulation Wave” on Supply Chains Impact Global Companies?

The EU Omnibus Package, specifically the "stop-the-clock" directive, has been adopted by the European Parliament and is awaiting final approval from the Council of the European Union. This directive delays the application of certain reporting and due diligence requirements for companies under the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

HR Policy Global’s Take: Reduced reporting and due diligence requirements do not mean companies can pay less attention to their supply chain operations and labor rights. Maintaining and recording ethical practices, protecting organizational reputation, answering stakeholders’ expectations, and preparing for regulatory changes remains critical. Join us at our upcoming webinar “Navigating Emerging Risks & Opportunities in Global Supply Chains: The HR Leader's Guide” to learn more.

Actionable Recommendations for Global Companies

Due Diligence and Compliance Strategies

• Beyond Compliance Approach: Leading companies should maintain comprehensive due diligence that goes beyond Tier 1 suppliers, particularly in high-risk sectors and geographies.
• Leverage Technological Solutions: Implement digital supply chain mapping tools and risk assessment platforms to maintain visibility into deeper supply chain tiers despite reduced regulatory requirements.
• Stratified Supplier Engagement: Develop a risk-based engagement strategy that tailors due diligence requirements to different supplier categories based on their risk profile. High-risk suppliers should undergo thorough assessment and capacity building, while lower-risk partners can be subject to lighter touch monitoring.

Capacity Building and Organizational Development

• Specialized Training Programs: Implement targeted training for procurement teams, compliance officers, and operational managers on identifying labor violation indicators and implementing remediation processes.
• Cross-Functional Task Forces: Establish dedicated human rights task forces bringing together expertise from HR, legal, compliance, procurement, and sustainability functions.

Stakeholder Engagement and Transparency

• Multi-Stakeholder Collaboration: Participate in industry initiatives and multi-stakeholder partnerships focused on addressing systemic human rights issues in supply chains.
• Worker Voice Integration: Implement effective grievance mechanisms that allow workers throughout the supply chain to report concerns safely and anonymously.
• Transparent Reporting: Maintain comprehensive public reporting on human rights due diligence efforts. Modern slavery statements, human rights reports, and sustainability disclosures should include specific information about forced labor risks, prevention measures, and remediation outcomes. Transparency builds trust with stakeholders and demonstrates commitment to ethical practices regardless of regulatory minima.