WageIndicator spoke with Ruben Zandvliet, Director of Standards at Shift, about what’s at stake as the European Union (EU) revises its sustainability rules — and how workers’ rights could be weakened if we don’t act.
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| Ruben Zandvliet |
The latest draft of the European Sustainability Reporting Standards (ESRS) aims to simplify reporting for companies while still giving investors and stakeholders the data they need. It’s part of a broader EU plan to simplify sustainability laws, including changes to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
But here’s the problem: the draft creates a double standard on wages. Companies would need to report whether their employees inside the EU earn an adequate wage but could get away with measuring against far lower standards for workers outside it. You can find the link at the end of the article to add your feedback and help stop this from happening.
A conversation between Ruben Zandvliet, Shift and Paulien Osse, Co founder and Global lead Living age, WageIndicator.
Paulien: Can we have some blunt questions? Which EU directives are being changed? One or two? Which abbreviations?
Ruben: At the moment, the European Union is revising quite a lot of legislation. But what we are most concerned about, from the perspective of human rights protection and, in this case, adequate wages or living wages, are the CSDDD and especially the CSRD.
So:
- CSDDD = Corporate Sustainability Due Diligence Directive
- CSRD = Corporate Sustainability Reporting Directive
These are the two directives about conducting due diligence (CSDDD) and reporting on due diligence (CSRD).
If we go one layer deeper: the CSRD (the Reporting Directive) itself is a framework. It determines which companies are in scope and what the broad parameters are for reporting. But the detailed requirements are in the European Sustainability Reporting Standards (ESRS). These are also being revised as part of the omnibus package.
Paulien: So, to wrap up: many directives are changing, but the key ones are CSRD and CSDDD. Should I go deeper for clarity?
Ruben: Yes, because the call to action is on the ESRS. That’s where we find the problematic requirement: companies being asked to report on minimum wages as if they were adequate wages, which is the EU term for a living wage. This is something we now have the opportunity to address in a public consultation.
Paulien: And ESRS relates to CSRD or CSDDD?
Ruben: Directly to CSRD. CSRD is the Reporting Directive. It determines which companies must report on sustainability, and the actual reporting requirements are in the ESRS.
Paulien: Why does this need to change from the EU perspective? Why did we have this directive, and all of a sudden, it needs to change?
Ruben: The official rationale from the European Commission is that the reporting requirements were too many and too complicated and that companies need standards that are easier to understand and implement. So it’s framed as simplification.
And there is no question that some simplification was in order. A great deal could be simplified while preserving what is most important – and most of the ESRS revisions do this well. The disclosure on adequate wages is a key exception.
And at the same time, the Commission has used the idea of ‘simplification’ to propose that companies with less than 1000 employees – thousands of which were already reporting sustainability information for years under EU law – should no longer have to do so. This is clearly unjustified now that the standards are simplified.
Paulien: But didn’t the CSRD just come into effect? Is it normal for it to be debated and changed so quickly?
Ruben: Not this fast. The CSRD was just in force and only the largest companies in scope have reported once now using the ESRS. Now we’re already rushing into a revision. But the ESRS revision also presents an opportunity. When the current ESRS were developed, the ILO did not yet have a clear position on living wages. Now they do, so we were hopeful that we could use this to improve company disclosures on wages and create the right level of transparency.
Paulien: Okay, so let’s focus on the revision of the ESRS. How does that work? Can we influence it?
Ruben: Yes, while the revision of the CSRD and CSDDD is in the hands of the European Parliament and Member States, the new ESRS is developed by EFRAG - formerly the European Financial Reporting Advisory Group. Shift sits on the EFRAG board, which is a multi-stakeholder body with companies, banks, trade unions and civil society representatives. The board has adopted an exposure draft which is now open for public consultation. Everyone can provide feedback until the end of this month. Ultimately the new ESRS will be adopted by the European Commission, Parliament and the EU Member States, but their development really is a multistakeholder process in which expertise matters. It is less political.
It is critical that as many people as possible flag the problem with the current “adequate wage” language in Question 28 of the survey.
Paulien: Okay. So why exactly is the text of the exposure draft problematic on the issue of living wages?
Ruben: The issue is a double standard:
- Inside the EU: employees’ wages are benchmarked against the Adequate Wage Directive, which is defined similarly to the living wage, as what workers need for a decent standard of living.
- Outside the EU: companies have a hierarchy of three options. The default option tells companies to use collective bargaining or statutory minimum wages. But minimum wages usually do not equal adequate or living wages. See this visual
Problems:
- Discrimination – Companies are required to discriminate in how they measure the adequacy of their employees' wages - using a true adequate or living wage as the measure for those in the EU and a lower standard for others.
- Transparency – Companies don’t need to disclose which option they used. So a company using minimum wages can claim it pays a living wage, while another company honestly reporting a gap looks worse.
This encourages greenwashing.
Paulien: Understood. So the fix would be to replace references to minimum wage principles with ILO living wage principles?
Ruben: Exactly. We should:
- Require that minimum wages may only be used if it is clear that they equate with adequate or living wages. move the wage-setting principles reference.
- Refer instead solely to the ILO principles for estimating a living wage – not the ILO’s principles on wage-setting, which are quite different in purpose and not relevant here.
- Require companies to disclose which living wage methodology they use, like referring to IDH recommendations - check here https://www.idhsustainabletrade.com/idh-living-wage-identifier/
Paulien: It’s now up to us to review survey question 28 on Adequate Wages, along with others, and provide feedback — that’s how companies, multinationals, ordinary people, no matter who they are or where they work, can help prevent this text from being passed.
Add your voice today! To learn more, please check the press release published by EFRAG.
List of Abbreviations:
EU - European Union
ILO - International Labour Organisation
CSRD - Corporate Social Responsibility Directive
CSDDD - Corporate Sustainability Due Diligence Directive
ESRS - European Sustainability Reporting Standards
EFRAG - European Financial Reporting Advisory Group
Compiled by Pritha Bhattacharya
September 2025