New European Union procurement rules that could reshape public spending are failing to mandate strong human rights and environmental safeguards to prevent unscrupulous companies from winning contracts by underbidding on price, a Swedish watchdog warned Wednesday.
Responding to the European Commission’s proposal to replace three existing directives with a single regulation meant to simplify procedures while prioritizing “Buy European” and quality over the lowest price, Swedwatch said that the measure’s impact on workers and communities in public‑sector supply chains will ultimately depend on whether human rights and environmental due diligence are firmly embedded in the final legislation.
Swedwatch described some of the “promising steps” the new Public Procurement Act would take, among them weighting quality for at least 30 percent of the evaluation score—and 50 percent for labor‑heavy jobs—meaning that a bid would no longer be able to win on price alone. The measure, the organization said, also recognizes how working conditions in global supply chains relate to public contracts and moves to build public trust by publishing contract data from the initial notice and bidding stages to final execution and payment milestones.
At the same time, the proposal “stops short” of explicitly recommending human rights due diligence as a preferred award criterion or contract performance condition, Swedwatch said. It also fails to introduce mandatory social obligations to promote fair working conditions and accountability throughout supply chains by requiring public procuring entities to comply with the Corporate Sustainability Due Diligence Directive.
“Without firm due diligence requirements, suppliers that cut corners on human rights may still win public contracts at the expense of more responsible competitors,” Mathieu Vervynckt, head of unit, supply chains, at Swedwatch, said in a statement. “Workers producing goods and delivering services for the public sector, as well as communities affected by suppliers’ activities, may therefore continue to face severe human rights violations.”
Swedwatch pointed to a 2025 report it produced that linked public funds used to acquire hospital textiles to exploitative labor practices in Pakistan’s textile industry. Based on focus groups and interviews with 89 factory workers across nine textile facilities in Faisalabad and Karachi, the study found that most workers involved in manufacturing bed linens, uniforms and hospital textiles procured for European public healthcare systems earned far below Pakistan’s legal minimum wage, worked without formal employment contracts, lacked social security or sick leave and faced severe occupational health and safety risks.
“Enabled by flaws in the EU’s public procurement directive, European taxpayer money is effectively supporting a system that rewards exploitation—undermining both human rights and fair market competition,” Sofia Käll, program officer at Swedwatch and leading researcher of the report, said at the time. “Public procurement should be a force for good, not a subsidy for abuse.”
At the same time, the study noted that Swedish regions implemented sustainability‑driven procurement practices, including human rights and environmental due diligence frameworks—albeit voluntarily—with “notable success” that did not undermine competitiveness or limit opportunities for small and medium‑sized enterprises.
“The assumption that stronger human rights requirements would undermine Europe’s competitiveness doesn’t hold,” Käll said on Wednesday. “Stronger requirements would prevent companies competing primarily on low prices from gaining an unfair advantage, while giving EU companies actively adjusting to emerging sustainability rules a natural competitive edge over their American or Chinese counterparts.”
Social criteria, Swedwatch said, must “carry real weight.” That means scrapping the Public Procurement Act’s proposed “comply or explain” approach, which would still let the lowest price secure the contract as long as public procurers submit explicit written justification. The new rules, it added, must also enable public authorities to routinely obtain information on working conditions at production sites and their impacts on affected communities, as well as how suppliers identify, prevent and mitigate human rights risks and impacts.
“Greater supply chain transparency is essential to ensuring that taxpayers’ money is spent ethically,” Vervynckt said. “There is broad political agreement that public money—our money—should not fund corruption or human trafficking. So why should we accept it perpetuating exploitative working conditions, destroying ecosystems or undermining community land rights?”
But equally important, Swedwatch said, is that the Public Procurement Act give public buyers the legal certainty they need to address supply‑chain impacts. Doing so, it said, would empower contracting authorities to tackle risks further up the supply chain by clearly recognizing human rights and environmental policies and supplier codes of conduct as contract requirements.
“Our experience shows that public procurers are ready to play their part in implementing stronger human rights requirements but often lack the legal clarity and capacity to act,” Käll added. “EU policymakers should provide clear legal pathways and practical tools to ensure that taxpayers’ money does not contribute to human rights violations.”
