New legislation aims to hold companies accountable for ethical practices in their supply chains
In a significant move towards promoting corporate accountability and ethical business practices, European Union countries have reached a consensus on a new law requiring companies to ensure their supply chains do not contribute to environmental damage or employ forced labor.
According to BBC News the legislation, known as the Corporate Sustainability Due Diligence Directive (CSDDD), received backing from a majority of 17 out of the 27 EU member states, with no votes against it.
The agreement marks a milestone in the EU’s efforts to address concerns regarding the social and environmental impacts of global supply chains. However, the path to consensus was not without its challenges, as substantial changes were made to the original text to accommodate differing interests and concerns among member states.
Critics of the law argue that these compromises have diluted its effectiveness, raising questions about its ability to effectively address issues such as forced labor and environmental degradation. Despite these concerns, proponents view the legislation as a crucial step towards promoting sustainable and responsible business practices within the EU and beyond.
Under the CSDDD, European companies will be required to conduct due diligence to ensure that products they import adhere to environmental and human rights standards, including the prohibition of child labor. Additionally, businesses will be mandated to take measures to prevent or minimize potential harm caused by their operations and communicate their findings transparently.
However, compromises made during weeks of negotiations have resulted in adjustments to the scope of the law. Originally proposed to apply to firms with 500 employees or more and a revenue of €150 million, the legislation will now only affect larger businesses with 1,000 employees or more and a net turnover of at least €450 million.
The draft legislation must now be approved by the European Parliament to become law, a step that is widely expected given the support it has garnered. Once approved, businesses will be granted a period to implement the new practices outlined in the directive.
Friday’s approval of the draft legislation follows previous setbacks in February when the bloc failed twice to reach a consensus. Countries such as Germany and Italy, which initially objected to the original text, raised concerns about its potential impact on their industries, particularly small and medium-sized businesses.
As the EU moves forward with efforts to strengthen accountability and sustainability in global supply chains, the adoption of the Corporate Sustainability Due Diligence Directive represents a significant milestone in shaping the future of responsible business conduct
