EU Countries Block Supply Chain Audit Law

by Carolyn Mathas

In the 11th hour,  European Union countries blocked new rules requiring large companies to check if their supply chains use forced labor or cause environmental damage, following recent German opposition.

The corporate sustainability due diligence directive (CSDDD) needed 15 EU countries, or 65% of the EU population, before a final vote in the European Parliament, where lawmakers were expected to support it. Insufficient envoys from the 27 EU countries backed the law for it to proceed, with opposition led by Germany’s pro-business Free Democrats (FDP). 13 EU members abstained, and one voted against, an EU diplomat said.

Belgium tried to secure backing for a text already agreed with the European Parliament, but it withdrew it from the agenda at the last minute after Germany and Italy indicated they would abstain.

Under the CSDDD, which was expected to begin in 2027, large companies in the European Union would have to identify and remedy cases of employing forced or child labor or environmental damage, such as deforestation, in their supply chains. A group of 136 campaign groups issued a joint statement that the blockage was a “deplorable setback” orchestrated by Germany’s FDP and hit by a last-minute attempt by France to propose a 10-fold increase in the employment threshold.

The rules were for EU companies with over 500 employees and a net worldwide turnover above 150 million euros ($162.2 million). $1 = 0.9250 euros).

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