EU supply chain law ‘slashed’ by member states in last-ditch deal

Member states on Friday (15 March) agreed new rules to hold both EU and non-EU companies accountable for their impact on human rights and the environment — but the landmark legislation was severely watered down by delegations and will not come into force for most companies until the end of the decade.

“EU countries did it again: they slashed the rules to appease big business, dealing a blow to Europe’s self-proclaimed standing as a champion of democracy and human rights,” said Marc-Olivier Herman, Oxfam EU’s economic justice campaigner.

The EU Commission originally tabled the so-called corporate sustainability due diligence directive (CSDDD) in February 2022, and a provisional agreement was reached in late 2023 — but that failed to be formally adopted by member states over legal and administrative concerns more than two weeks ago.

At the end of February, 14 countries either abstained or rejected the provisional agreement, while on Friday, after significant last-minute changes, there were nine abstentions and one ‘reserve for study’ position, EUobserver learnt.

“The price of the agreement was a significant dilution of the ambition of the legislation,” said Green MEP Heidi Hautala after the formal agreement.

The scope of the directive was sharply reduced to secure a deal at Council level — doubling the threshold of companies which it applies to, from those with 500 employees to 1,000, and tripling the minimum turnover from €150m to €450m.

“High-risk sectors were deleted entirely and the legislation’s entry into force will be further delayed,” Hautala added, referring to the provision to include companies in high-risk sectors with more than 250 employees and a certain turnover in agriculture, construction, extractive industries or textile manufacturing.