King's College London

In July 2024, the European Union introduced a ground-breaking piece of legislation aimed at transforming corporate sustainability and responsibility across global value chains.

The Corporate Sustainability Due Diligence Directive (the CSDDD) marks a significant step forward in ensuring that companies not only acknowledge their environmental impact, but also the human rights implications of their operations and supply chains, both within and beyond Europe.

As someone deeply invested in understanding and improving worker well-being in global supply chains, I welcome this legislation. However, while it represents progress, it also prompts critical questions about how businesses will rise to the challenge of truly supporting the people who power their supply chains, and helping us work towards achieving SDG 8 ‘decent work for all’.

The promise and pitfalls of auditing

Auditing has long been the go-to method for companies to understand supply chain conditions and manage risks. Yet, as I have argued in previous research, including the recent publication on factory worker well-being in China (co-authored with my colleague Dr Minette Bellingan), the method of auditing – while necessary – only scratches the surface of what is needed to ensure meaningful wellbeing for workers.

Audits are good at identifying visible risks, such as poor working conditions or violations of basic safety standards, but they often fail to capture the more nuanced aspects of worker well-being. In fact, they can sometimes reduce complex human experiences to a checklist, overlooking the broader context of workers' lives and the relational factors that significantly impact their well-being.

A novel study in worker well-being

In 2017, I joined Dr Minette Bellingan, Industrial Fellow with Industrial Resilience Research Group, Institute for Manufacturing at the University of Cambridge, in a longitudinal study intended to address the gaps in the information provided by audits by listening to the authentic voices of workers in supply chains.

Conducted over several years in four factories in China, we used innovative diary methods to listen directly to workers, inviting them to leave a voicemail on their phone at the end of the working day where they answered one simple question: “How was work today?”. We discovered their concerns often extended far beyond traditional audit measurements, and the study highlighted the disparity between what auditors and factory workers considered to be ‘decent work’.

 

The surprising truth of ‘decent work’

The study revealed that factory workers connected their wellbeing with their future aspirations, rather than typical audit measurements. We wrote about this in our first article: 'Capturing the psychological wellbeing of Chinese factory workers'.

Whilst working hours and health and safety remained important, the ability to achieve their aspirations emerged as far more essential for genuine well-being. However, in conventional audits, this is completely neglected as a measurement. This gap between what is measured and what truly matters to workers highlights a critical flaw in the current system of corporate oversight.

Legislation: a catalyst for change

The new EU legislation could be the catalyst we need to address this gap. It raises the bar by making it clear that it is no longer optional for companies to be unaware of what is happening in their supply chains. This is not just about avoiding risks; it's about proactively improving the lives of the people who make our products. The legislation challenges companies to move beyond compliance and to think deeply about their role in fostering well-being throughout their value chains.

Yet, I am cautious. The most immediate response from many businesses will likely be to increase the frequency and scope of audits because these are familiar methods. However, we need to push ourselves further. The legislation should not simply lead to more of the same. Instead, it should encourage companies to explore new methods of engagement, such as the diary method we employed in our research, which allowed us to gain unprecedented insights into the daily lives and dreams of factory workers.

Our global responsibility

While this legislation originates in the EU, its implications are global. Supply chains are not confined by borders, and the responsibility to ensure decent working conditions should not be either. The legislation follows in the footsteps of earlier efforts by countries like Germany and Switzerland, which have already implemented stringent regulations requiring companies to address human rights issues within their supply chains. These initiatives set a precedent, but the new EU directive has the potential to create a level playing field across Europe, and hopefully, beyond.

But with this legislation comes as a significant burden on businesses, especially those in Western countries. It's a burden that is not without reason – we have, after all, benefited from the globalisation of production, often at the expense of those working in poor conditions far from our shores. The responsibility is ours, and it's time we embrace it fully. Yes, it will be hard work, and yes, it will come at a cost. But the cost of inaction, both in human and ethical terms, is far greater.

Raising the floor, expanding the ceiling

The EU's Corporate Sustainability Due Diligence legislation is a critical step in raising the bar of what we expect from businesses. It establishes a baseline that all companies must meet. But we don’t need to stop there. Let's use this as an opportunity to expand the ceiling – to explore what more we can do to support the well-being of workers, not just in terms of their immediate safety and comfort, but in helping them achieve their long-term dreams and aspirations.

Factories have played a pivotal role in lifting millions out of poverty, particularly in developing countries. Yet, not all factories are the same, and abuse still exists. This legislation acknowledges the dual role of factories as both engines of development and potential sites of exploitation. As businesses, we have a duty to ensure that we are not complicit in the latter.

The definition of good business

Western corporations need to view this new legislation as more than just a regulatory hurdle; it is an invitation to rethink how we do business. It challenges us to move beyond audits, to truly listen to the workers in our supply chains, and to take meaningful action to support their well-being. After all, a factory where workers are truly well is a factory that performs better, creating value for everyone involved.

We need to recognise their humanity and ensure that, as they work towards their dreams, we do everything in our power to support them safely, fairly, and with dignity. This is not just a moral imperative – it’s the definition of good business.

*

Dr Catherine Tilley is the Impact Director at the Centre for Sustainable Business. She is a Senior Lecturer in Business Ethics & Sustainability and teaches on all Undergraduate programmes. Her areas of expertise include; decision-making in businesses, social and environmental sustainability in businesses, and change in complex systems.

*

This article was brought to you by the Centre for Sustainable Business. Find out more about their work here