EU Supply Chain Law Stalls Amid German-Led Opposition

Title: EU Stalls on Corporate Sustainability Directive Amid German Opposition

In a significant development within the European Union, member countries have halted the progress of new regulations aimed at ensuring large companies scrutinize their supply chains for instances of forced labor and environmental harm. The Corporate Sustainability Due Diligence Directive (CSDDD), which was on the cusp of a final vote in the European Parliament, failed to garner sufficient support from envoys of the 27 EU nations.

The directive required a ‘qualified majority’ of 15 countries, representing at least 65% of the EU population, to move forward. However, during a late-stage meeting on Wednesday, the proposal did not achieve the necessary backing. Germany’s Free Democrats (FDP), a key faction in the country’s ruling coalition, spearheaded the opposition, citing concerns over the imposition of excessive bureaucratic demands on businesses.

With 13 member states abstaining and one outright rejection, the directive’s future is now uncertain. Belgium, currently holding the EU presidency and responsible for rallying support for the CSDDD, had already faced challenges earlier this month when Germany and Italy signaled their intentions to abstain, prompting a withdrawal of the text from the agenda.

Belgium has expressed its intention to review the situation and consult with the European Parliament to address the concerns of EU members. However, if no consensus is reached within approximately two weeks, the directive may be shelved until after the EU parliament election in June, raising questions about its eventual implementation.

The CSDDD, which was set to take effect in 2027, targets EU companies with over 500 employees and a net worldwide turnover exceeding 150 million euros. Its aim is to compel these corporations to identify and rectify any involvement in forced or child labor, as well as environmental degradation like deforestation, within their supply chains.

This latest impasse has been met with criticism from a coalition of 136 campaign groups, who have labeled the blockage as a “deplorable setback.” They point to Germany’s FDP and a last-minute proposal by France to significantly raise the employment threshold as key factors in the directive’s stagnation.

As Germany faces scrutiny for its stance on this directive and other EU environmental initiatives, such as phasing out CO2-emitting cars by 2035 and reducing truck emissions, the EU’s commitment to corporate sustainability and human rights remains under intense debate.

Supply chains

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