In recent years, the European Union had set a clear trend toward the regulation of economic activities, reaching the point of adopting a directive on environmental and human rights due diligence last year (2024), extending this duty to so-called “chains of activities.” However, as always, politics set the pace, and despite this progress, just one year later, the same European Union now seems to be backtracking.

There is no doubt that regulation plays a fundamental role—both in acknowledging and addressing historic demands and claims by individuals, groups, and communities regarding rights violations, and in providing legal certainty to companies and investors about what is ultimately expected in terms of corporate conduct.

Why disclose information? Why carry out human rights due diligence (HRDD)? Why use leverage to ensure that value chains are not creating value at the expense of people and the planet? Why is it expected that companies generate profits, but not at any cost—or at least not at the expense of human and environmental well-being?

If the State doesn’t provide this clarity—through clear, consistent, coherent, and predictable regulation—then who should? The market itself? Consumers? Communities in affected areas? Workers?

The truth is, neither the European Union nor the new U.S. administration can deny a basic reality: economic activities can—and often do—generate both positive and negative impacts on people and the planet. When it comes to negative impacts, the key question becomes: who bears the cost? Today, the EU’s response seems to differ from what has been agreed upon over the past decades by institutions like the United Nations, the OECD, and the ILO: States are responsible for protecting and guaranteeing rights; companies are responsible for respecting them. And these are not the same thing.

Respecting human rights by businesses is materialized through due diligence processes. And HRDD is nothing more than identifying, assessing, and managing impacts—by preventing, mitigating, or remediating them. This includes activities across the value chain.

One of the main arguments from lobbyists and proponents of the Omnibus regulation is that disclosing information and conducting HRDD generates costs and undermines business competitiveness. However, those who adopt this position lack solid evidence to prove that the cost of doing due diligence is higher than the cost of not doing it.

That said, supporters of the EU directives on reporting and due diligence haven’t been able to fully demonstrate how these measures would lead us to a better world either. The reason? Their perspective is deeply Eurocentric. On the contrary, some negative effects of these directives were already being seen in non-European countries—especially in Latin America and Africa. In the agricultural sector, small producers were already deeply concerned that the burden of proving their products were free of child labor, forced labor, and deforestation was falling on them—not on the European buyers who were supposedly most interested in this verification.

How can a small-scale producer of coffee, palm oil, or cocoa prove at a European port the full traceability of their product in environmental and human rights terms?

Assuming the inevitability of a broader deregulatory trend—and with it, the deliberate omission of State responsibility to regulate economic activity in relation to adverse social and environmental impacts—what are we left with?

Paradoxically, in this tug-of-war between State and Market, it is the market that is currently placing greater demands on companies. Unlike States—which increasingly avoid regulation—investment banks, credit rating agencies, and the broader financial sector prefer to place their resources in businesses that disclose environmental and social information and that, ultimately, offer stronger guarantees and confidence.

Here are four reasons why we believe companies should continue to disclose information and conduct human rights due diligence:

1. Because it’s the right thing to do. Social life is not a business deal (despite what Trump might claim), and it’s indefensible to generate profits at the expense of people and the planet.

2. Because not doing so increases risk—financial, legal, operational, and reputational.

3. Because stakeholder pressure will not stop. Strategic engagement and trust-building remain highly relevant.

4. Because it’s practical. If social and political conflicts persist or escalate, access to resources and raw materials essential for development and the energy transition will become increasingly difficult.

In CREER’s 10 years of experience, we continue to see companies that only speak about HRDD when a regulation requires it (mere compliance), or when they’re being sued or boycotted (reactive behavior). But we’ve also facilitated dialogues with companies that are genuinely committed to peacebuilding, social inclusion, and more horizontal engagement with communities and workers—without needing any regulation to tell them to do so.

Likewise, we continue to see community and NGO representatives with a deeply anti-business stance, while at the same time we see leaders and grassroots organizations who have broadened their engagement strategies with companies and the State in pursuit of non-transactional agreements based on trust.

The European Omnibus debate is more than a matter of short-term political interest. It is a snapshot of long-standing debates on State vs. market, regulation vs. self-regulation, financial vs. non-financial information (and I often say there’s nothing more financial for a company than what’s considered non-financial), and accountability (rear-view mirror) vs. responsibility (panoramic view). Ultimately, it’s a matter of coexistence.

That’s why the Omnibus process and its outcome matter—but they shouldn’t matter too much either. Two things are clear:
(i) The Omnibus still needs approval from the European Parliament and the Council of the EU;
(ii) Regardless of what happens, we cannot depend on that decision. Perhaps now is the time to generate knowledge, practice—and appropriate regulation—from the regional perspectives of Asia-Pacific, Africa, and Latin America.