No Agreement On Supply Chain Due Diligence Law

Permanent representatives to the EU failed to approve a new law focused on due diligence within supply chains, the Corporate Sustainability Due Diligence Directive (CSDDD), according to a statementfrom the Belgian presidency.

• Proponents of the directive claimed that "The CSDDD means protective human rights and environmental standards. It mandates due diligence to avoid forced labour and ensure the payment of living wage alongside core occupational health and safety as well as environmental protection measures. These can be enforced against EU companies in their home countries via EU state authorities and courts..."
• Forbes notes"The new due diligence requirements apply not only to the direct actions of the company, but also to their subsidiaries and supply chain. EU based companies, as well as non-EU companies that conduct a set level of business in the EU, could become liable for the actions of their suppliers."
• Both Germany (at the behest of the FDP, a junior partner in the governing coalition) and Italy had previously signalled their intention to abstain on the decision due to concerns about the impact on domestic businesses, resulting in a postponement to the vote.
• Earlier France also showed signs of backing away from support, instead supporting a significant watering-down of the CSDD's provisions. Alberto Alemanno at HEC Paris Business School claims "France proposes to reduce the number of companies caught in the scope of the Due Diligence Directive by increasing the employee threshold from 500 employees to 5000. This removes 80% of companies from the scope of CSDDD."