Governments support stripped-down corporate due diligence law

After weeks of uncertainty, new EU rules on sustainable supply chains seem likely to pass into law.


EU member states on Friday (15 March) have voted in favour of a landmark new law requiring companies to check supply chains for dodgy environmental and labour practices.

MEPs and government officials struck a tentative deal on the corporate sustainability due diligence directive, or CSDDD, in December – but its future was thrown into doubt after last-minute hesitation from Germany and Italy.

Now the measures seem likely to pass into law, after Italy approved a stripped-down version of the legislation at a regular meeting of diplomats in Brussels.

Environmental and social activists such as Oxfam and Amnesty International say the rules will stop corporations making profits from human suffering.

The European Commission has also said it will avoid companies having to navigate multiple, potentially incompatible, national rules within the bloc’s single market.

Belgium, which chairs the EU Council that represents member states, has worked over recent weeks to assuage national concerns over excessive red tape, tripling a threshold so the rules would only apply to companies with over €450 million worldwide turnover in its most recent attempt to overcome an impasse.

The latest draft removed civil liability provisions that would allow trade unions to sue noncompliant firms, a controversial measure which countries such as Finland opposed.

The rules still need to be voted on by MEPs, and April is the last chance for them to do so ahead of June elections.

The Council endorsement is a “victory in the fight to hold companies responsible for people and the environment,” parliament negotiator Lara Wolters (Netherlands, Socialists and Democrats) said in a statement. “It is high time to take a big step towards a fairer economy of the future.”

But others are less convinced, including in the parliament’s largest political grouping.

On Tuesday, Angelika Niebler (Germany/European People’s Party) argued the diluted plans would still indirectly impact smaller businesses, and could encourage some to pull out of the developing world all together.

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