EU supply chain law delayed amid German FDP opposition
February 9, 2024
A blockade by Germany’s business-focused Free Democrats, part of the country’s governing coalition, prevented the adoption of a proposed EU law that would require large companies to assess whether their supply chains use forced labor or cause environmental damage.
The Belgian EU presidency postponed the vote, which was scheduled for Friday, at the last minute.
A “qualified majority” of 15 EU countries, representing 65% of the EU population, is needed for the Corporate Sustainability Due Diligence Directive (CSDDD) to proceed to a final vote in the European Parliament, where voters are expected to support her.
On Friday, it was unclear whether enough envoys from the 27 EU countries would support the legislation, with Germany set to abstain. The Belgian EU president said the matter would be postponed to a date to be announced.
What is CSDDD?
Under the CSDDD, which will come into force in 2027, large EU companies will have to identify and take corrective action if they find that their supply chains use forced or child labor or cause environmental damage such as deforestation.
The rules will apply to EU companies with more than 500 employees and a global net turnover of more than €150 million ($161.5 million), and to third-country companies with an EU turnover of more than this amount, but with a delay of three years. Fines for violating the rules can reach 5% of a company’s global revenue.
The law has generated controversy in other countries, such as the United States, because it covers around 4,000 companies that do business in the EU but are based elsewhere.
Source: DW
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