EU countries back new human rights supply chain law

Representatives of European Union member states on Friday backed a new law intended to protect human rights in supply chains and hold large companies accountable if they profit from child or forced labor outside the EU, or cause undue environmental damage.

The proposed legislation received the backing of 17 ambassadors representing 65% of the EU population – the "qualified majority" required for the "corporate sustainability due diligence directive," more simply known as the European Supply Chain Act, to proceed to a final vote in the European Parliament.

The law will apply to companies with over 1,000 employees and annual revenues of over €450 million ($490m). It will come into effect gradually over a five-year period, starting with companies with over 5,000 employees and annual revenues of €1.5 billion.

The text came after hard-won compromise between member states and parliamentary negotiators.
The vote secured the requisite backing after Italy swung in behind it, satisfied that its reservations over new regulations on packaging waste had been addressed during complex negotiations.

Why did Germany abstain?

But Germany, the EU's largest economy, abstained due to divisions within its governing coalition.

While ministers from the larger Social Democrats (SPD) and Greens are in favor of the law, the minority partner pro-business Free Democrats (FDP) has expressed concern it could increase bureaucracy and unduly burden the economy.

"The risks for our country and its economy, which is characterized by small and medium-sized enterprises, outweigh the benefits," Germany's FDP justice minister, Marco Buschmann, told the regional Rheinische Post newspaper.

The German Chamber of Commerce and Industry (DIHK) said the law would be a major burden and was impractical, while lobby group BusinessEurope said European companies could be exposed to litigation and put at a disadvantage to their global competitors.

mf/wmr (Reuters, dpa)