New EU law risks giving leeway for labour exploitation and greenwashing

Publié: 11th décembre 2023

New law could exclude 99 percent of companies and could fail to protect workers, including children, from labour exploitation.  

EU lawmakers risk letting fossil fuel financiers, greenwashers, and companies violating labour rights off the hook under new European due diligence rules.  

EU negotiators – representatives from EU countries, the European Parliament and the European Commission – will meet on Wednesday 13 December to hammer out the final details for an agreement that risks leaving major corporate abuses unchecked.  

The proposal from EU countries grants a carve-out for banks, investors and insurers bankrolling human rights violations and destructive ventures. Financial sector giants will be exempt from scrutinising their investments and loans, despite mounting evidence linking them to companies harming people and the planet. For instance, ING and Société Générale are among the top 5 European biggest financiers of the mining giant Glencore, whose toxic mining activities displaced thousands of people and caused hundreds of thousands to suffer from respiratory symptoms in Colombia and Peru. 

The world’s biggest polluters risk escaping responsibility for the impacts of their emissions as EU countries are pushing to grant leeway for greenwashing. This means companies like Shell will only be required to outline, and not implement, their climate transition plans. 

“The compromise proposal put forward by EU countries staggers at the starting line. Some European governments and political groups echo the regressive corporate lobby’s tune in the negotiating room. But they can still make sure this game-changing law does not become a carte blanche for greenwashers and rogue companies”, said Oxfam EU’s Economic Justice Policy Lead, Marc-Olivier Herman.  

The law, as proposed, could exclude more than 99 percent of European companies, applying only to the largest ones. But size is not equivalent to risk. Sectors notorious for labour exploitation, like the agriculture or garment sector, could slip through the cracks, as 99 percent of them do not reach the 250-employee threshold to fall within the scope of this law. For instance, the current proposals fail to protect migrant women working in exploitative conditions in the Spanish fruit sector. 

In sectors like the coffee industry, companies buy from farmers who are paid below production costs. EU countries do not want to force these companies to take steps to address this issue. The proposal from EU countries also fails to protect children from various forms of child labour, as it only holds companies accountable if the child is below the compulsory schooling age, which means that in some countries 12-year-olds fall between the cracks. 

If the EU countries’ proposal prevails, survivors of corporate abuse will continue to face major obstacles in seeking justice as the proposal does not force companies to disclose crucial information. For example, people affected by Repsol’s oil spill in Peru face an uphill battle for justice with the company refusing to disclose key evidence. They will face the same hurdles under the EU countries' proposed law. 

“EU parliamentarians must hold their ground and ensure this law goes beyond words on paper. As we edge closer to the European elections, the EU has a once-in-a-generation opportunity to set a precedent for ethical business conduct”, said Herman. 

Notes aux rédactions

Marc Oliver Herman is available for interview and comment. 

Oxfam calls on the EU to agree on due diligence rules that:   

  • Apply to all companies.    

  • Apply to the entire value chain. This means it should cover all those affected by the company’s business, including those using their products and services.   

  • Include the financial sector. This means service providers (banks and insurers) and investors (fund managers, investment funds and pension funds). Those directly bankrolling environmental destruction and human rights violations like banks and investors must not be let off the hook.  

  • Force companies to adopt and implement a climate transition plan in line with the Paris Agreement and tie the remuneration of company directors with its implementation. 

  • Remove obstacles for survivors of corporate abuse to access justice, give trade unions and organisations the possibility to bring claims to courts and force companies to disclose evidence. 

  • Hold companies accountable for all forms of child labour in their supply chains. 

  • Require companies to engage with suppliers to reduce the risks for workers not earning a living income.   

Read Oxfam’s media brief which breaks down the proposal, the next steps and what Oxfam wants. 

The European Commission estimates that 9,360 European companies and 4,000 non-EU companies would be covered by the EU Corporate Due Diligence Directive if it covers companies with 500 employees and 150 million yearly turnover worldwide. With 30.1 million EU companies (2021), only 0.0003 percent of companies will be covered. The proposal from the European Parliament covers companies with an annual turnover of 40 million euro and over 250 employees, an estimated 65,000 companies, so 0.2 percent of companies.  

A recent report by Fair Finance International, Oxfam and partners in Colombia and Peru revealed that almost 50 percent of loans and underwriting to mining giant Glencore comes from major European banks like ING and Société Générale.  

Shell is one of the 20 largest state-owned and multinational firms driving 35 percent of all energy-related carbon (CO2) and methane emissions according to the 2020 report from Climate Accountability Institute.   

The Annual Report on European small and medium-sized enterprises (SMEs) reveals that 99.4 percent of businesses in the agri-food sector are classified as micro, small, or medium-sized enterprises. Similarly, 99.7 percent of companies in the textile sector fall under the SME category, and 99.9 percent of businesses in the retail sector are also SMEs. 

A report by the organisation Ethical Consumer revealed exploitative working conditions in the fruit-picking sector in the south of Spain. The workforce was made up mostly by women migrants who were paid less than the minimum wage and required to work overtime.   

The Fair Trade Risk Map shows how workers in sectors like coffee, rice, sugar, and cotton often do not earn a living income or work under exploitative conditions such as inadequate worker accommodation and excessive working hours.  

Two years ago, a massive oil spill off the coast of Peru by Repsol’s subsidiary devastated the coast’s ecosystem, killing fish and stripping 10,000 families from fishing and making a living. Peru’s United Nations office described it as “the worst ecological disaster” in the country’s recent history. A report by Peru Equidad and Cooperacción documented the shortcomings of Repsol's response in relation to both compensation for the fishermen and environmental remediation. 


Julia Manresa | Brussels, Belgium | | mobile +32 473 87 44 26 | +32 479 56 18 12 (personal WhatsApp) 

Jade Tenwick I Brussels, Belgium | | mobile +32 473 56 22 60 | +32 484 81 22 94 (personal WhatsApp) 

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