On the night of Wednesday to Thursday, the negotiators from the EU Council and the European Parliament reached a political agreement on the directive on companies’ due diligence obligations with regard to sustainability, the so-called EU Supply Chain Act, proposed by the EU Commission in February 2022. The aim is to hold companies with more than 500 employees and a global net turnover of more than 150 million euros accountable if they profit from child or forced labor outside the EU.
Bavaria Europaminister Eric Beißwenger: “In principle, the directive pursues a good, correct and important goal. However, with the current design, the EU is overstepping its mark. The scope of application now agreed means a significant expansion compared to the German Supply Chain Act, and not just in terms of the number of companies affected. Since a large part of the value chain is to be included, medium-sized suppliers will also face requirements and documentation obligations. The law threatens to impose major bureaucratic burdens, particularly indirectly on small and medium-sized companies. This puts our companies at a significant competitive disadvantage compared to companies from third countries that are not affected by the regulations.”
The EU Supply Chain Law regulates the obligations of large companies with regard to actual and potential negative impacts on the environment and human rights in their business chain, which includes the company’s upstream business partners and, in some cases, downstream activities such as distribution or recycling. It establishes rules for sanctions and civil liability for breaches of these obligations. And it requires companies to adopt a plan that ensures their business model is compatible with the Paris Agreement on climate change. Ultimately, business relationships with suppliers or customers may have to be terminated if negative impacts on the environment or human rights are identified by business partners and cannot be prevented or ended.
Beisswenger: “The directive weakens our companies in international competition at a time when they are already struggling with competitive disadvantages such as high energy and bureaucratic costs or a shortage of skilled workers. I fear that we will ultimately be doing human rights and the climate a disservice if our companies withdraw from Africa, for example, and local companies from countries that do not care in the least about environmental and social standards are forced into the gap.”
2023-12-14 20:47:29
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