'Wrecking ball' hits EU plans to curb global supply chain abuses

A “wrecking ball” has been dropped on European Union plans to stamp out workplace and environmental abuses in companies’ global supply chains after its biggest members watered down a new law, campaigners say. The EU’s Corporate Sustainability Due Diligence Directive, or CSDDD, was due to be approved this week but is now hanging in the balance after Germany, France, and Italy pulled support. Now NGOs and supportive lawmakers are worried that the legislation will be derailed altogether. The crackdown was prompted in part by the role European companies played in tragedies including the 2013 collapse of the Rana Plaza factory in Bangladesh and the 2019 failure of Brazil’s Brumadinho dam. It has already taken many years to reach the cusp of becoming law. But the German government withdrew its backing, citing “too many new liability risks,” as did Italy’s — after which the French government proposed stripping back the due diligence rules to spare the vast majority of firms from having to comply. There are now fears the directive will be dropped until after European Parliament elections looming in June, ahead of fresh negotiations by EU member states on Friday. Marc-Olivier Herman, Oxfam EU’s economic justice spokesperson, said the legislation — while far weaker than required, even in its original form — would still be a “big step forward” on current, nonbinding guidelines for corporate behavior. “It would create mechanisms to hold companies to account for human rights abuses, poor treatment of workers, or environmental damage. They could be brought before the European Court of Justice or be fined in the countries where they operate,” Herman told Devex. “There has been mounting pressure on the EU to act, partly because of iconic cases such as Rana Plaza and because of a growing awareness that businesses must play their role in addressing human rights abuses, environmental damage and climate change.” Herman said France’s proposal would apply the rules only to companies with at least 5,000 employees, instead of 500 — which would mean just 2,340 firms, instead of 16,400 — adding: “It is akin to a wrecking ball.” Human Rights Watch has issued an open letter to Emmanuel Macron, the French president, urging him to intervene personally to prevent “a disastrous outcome,” noting Paris has led the way with its own supply chain rules. “Failure to do so would have serious negative repercussions not only on human rights and the environment, but also on EU citizens’ trust in EU decision-making and on business operations throughout Europe and beyond, in their global value chains,” its Executive Director Tirana Hassan wrote. Belgium, which currently holds the EU presidency, has put forward further compromise proposals for Friday’s talks, which would apply the law to businesses with more than 1,000 employees and worldwide turnover of €300 million (about $327 million), say groups that have seen them. They would also remove proposed tougher requirements for high-risk sectors including clothing, agriculture, and mining. However, the pro-free market Free Democratic Party within Germany’s coalition government has indicated it will not support them, suggesting the issue should be parked until a new European Commission is appointed in the autumn, following the June elections. A spokesperson for Marco Buschmann, Germany’s justice minister and an FDP politician, told the Der Spiegel website: “The current text contains so many problematic passages that there are very serious doubts that they can be remedied quickly.” Oxfam pointed out a deal had been made. “It is unprecedented, after there has been agreement between the Council and the Parliament, for big member states to throw their weight around like this,” Herman added.