ETHICAL DILEMMAS AND ACCOUNTABILITY THE CORPORATE SUSTAINABILITY REPORTING DIRECTIVE AS LABOR AND SOCIAL RIGHTS ACCOUNTABILITY TOOL

Beginning of 2023, the Corporate Sustainability Reporting Directive (CSRD) entered into force, with a purpose to strengthen the rules concerning the social and environmental accountability of large EU and non-EU (if they earn over EUR 150 million on the EU market) companies which will now be expected to report on sustainability. The EU law now requires all large companies and all listed companies (except micro-enterprises) to disclose information on what they see as the risks and opportunities arising from social and environmental issues, and on the impact of their activities on people and the environment. The new Directive will aim to ensure that investors have access to the information they need to assess the impact of companies on people and the environment. In terms of labor and social rights, this is the first European attempt to link social and labor rights standards to the business competitiveness and access to EU funding. As such, it is a very innovative approach, with large potential to rectify all existing discrepancies between formally acknowledged labor and social rights of workers and practical implementation of those rights in business companies. In this paper, we will look into the main research question: whether the Corporate Sustainability Reporting Directive has potential to become the first-ever regional labor and social rights accountability tool. In research for this question, we will analyze provisions of the CSRD applicable to assess actual implementation of international fundamental labor and social rights of workers and contractors. Further, we will examine if the Directive has sufficiently elaborated mechanisms to sanction companies which would not align their employment and labor policies to the required standards of the CSRD.