The German business-focused FDP claims that the pending EU supply chain law will burden companies with cumbersome bureaucracy and force firms to crack down on damaging actions in their supply chains.
A blockade by Germany’s business-focused Free Democrats stopped 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. As a result, the Belgian EU presidency postponed the vote at the last minute.
A “qualified majority” of 15 EU countries representing 65% of the EU population is required to proceed to a final vote in the European Parliament, where lawmakers are expected to support it. It’s unclear if there are sufficient envoys from the 27 EU countries to support the legislation, with Germany abstaining. The Belgian EU presidency said the item would be postponed to a date to be announced.
By 2027, large companies in the EU will have to identify and take remedial action if they find that their supply chains use forced or child labor or cause environmental damage, such as deforestation. This will apply to EU companies with over 500 employees and a global net turnover of more than €150 million ($161.5 million) and non-EU companies with an EU turnover above that amount but with a three-year delay. Fines are high—as much as 5% of a company’s global turnover.
Germany’s pro-business Free Democrats opposed the supply chain law and raised late objections to an EU law to end sales of CO2-emitting cars by 2035 and to EU plans to reduce truck emissions. Coalition partners, the center-left Social Democratic Party (SPD), and the environmentalist Greens supported the legislation. They warned that Germany would lose credibility in the EU with its last-minute opposition.