Navigating the Shifting ESG and Labor Landscape in Europe and Beyond

In a recent HR Policy Global webinar, experts explored the rapidly evolving ESG and labor environment across Europe and beyond, offering insights for global HR leaders and compliance teams preparing for changes in the months ahead. 

Key takeaways:

Global ESG and labor trends are fluid: The landscape is highly political and increasingly tied to corporate governance. Companies that integrate due diligence, consultation processes, and supply chain oversight now will be better positioned as regulations evolve. 

Deregulation and the Corporate Sustainability Due Diligence Directive: Auret Van Heerden, Founder & CEO at Equiception Business and Human Rights, highlighted the “waves of deregulation” sweeping the European Union. While the EU is considering ways to simplify compliance, companies should not mistake this for a rollback of obligations—global employers will continue to face scrutiny from regulators. As the EU considers changes before the end of the year, key questions include:

• What will be the thresholds for applicability of the Directive to companies?

• How broadly do obligations extend across value chains, including suppliers? 

• How is “risk” defined, and what constitutes “addressing” it—mitigation or remediation? 

• What consultation rights do stakeholders have, especially where no worker representative body exists? 

• Could liability standards become uniform across Europe, affecting purchasing, sourcing, and business models? 

Ed Thompson, VP of Labor and Employee Relations at Caterpillar, shared practical steps, including strengthening supplier oversight, training staff on human rights, and embedding accountability through governance committees. 

Global Perspectives and U.S. Pushback: The debate is not confined to Europe. U.S. Securities and Exchange Commission Chair Paul Atkins recently criticized EU sustainability reporting and due diligence rules, warning of high compliance costs for U.S. companies and investors. He urged European authorities to prioritize free enterprise and reduce reporting burdens rather than pursuing what he characterized as obligations “unrelated to the economic success of companies.” His remarks underscore the growing transatlantic divide regarding ESG regulation and the potential for conflicts for global businesses. 

The Role of Unions: Unions in Europe are expected to seek greater influence, especially as new EU directives require consultation with worker representatives, noted Alan Wild, Senior Advisor at HR Policy Global. In countries without established structures, companies must proactively develop alternative consultation mechanisms to remain compliant and avoid disputes. 

Looking Ahead: Timing is critical as regulatory, geopolitical, and investor pressures reshape ESG and labor priorities Employers must balance transparency, compliance, and operational challenges to navigate an increasingly complex landscape.