The fate of the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) will be decided today (February 9) in a European Council vote, but many worry the bill will fail without Germany and Finland’s support.
The EU Council and Parliament reached a provisional deal in December to make supply chain due diligence a legal obligation for companies operating in the EU. The law appeared headed for easy approval, but conservative debates in Germany and Finland have since cast doubt on its future.
The two countries have announced their intention to abstain from today’s vote to approve the law in the EU Council, citing concerns over the administrative burden it would place on companies.
CSDDD in its current form would apply to large EU-based companies of more than 500 employees and a net turnover of €150 million, as well as non-EU companies with a €300 million net turnover generated in the EU – a total of about 16,000 firms. These would be required to identify and mitigate human rights, climate change and environmental risks within their supply chains, with fines of up to 5% of turnover for non-compliance.
Today’s vote is to approve or reject the bill, and member states cannot suggest modifications. If the law doesn’t pass in its current form, it will be sent back to the negotiating table.
Businesses and NGOs urge the EU to pass CSDDD
This last-minute twist has been criticised by business and environmental organisations, despite the fact that the draft was previously deemed incomplete for not including financial services within its scope.
Companies including Bayer, Aldi, Epson and Mars joined a group of business networks to write an open letter urging the German government not to abstain from the vote, saying “the requirements of the CSDDD are appropriate and feasible”.
Sustainable business group Businesses for a Better Tomorrow also expressed concern over the withdrawn support from Germany and Finland. “The CSDDD is not a threat to European businesses but a historic opportunity to build a fair economic framework for all, and to end the competitive advantages of companies that act to the detriment of human rights and the environment, which currently jeopardize the viability of responsible European businesses,” the network said in a press release.
‘Short-sighted and populist manoeuvres’
WWF criticised the “eleventh-hour assaults” on the due diligence law, which it said were driven by “short-sighted and populist manoeuvres”. Uku Lilleväli, Sustainable Finance Policy Officer at the WWF European Policy Office, added: “Will the EU help its businesses transition to more risk-resilient and less harmful business models, or will it succumb to misleading notions that competitiveness necessitates the liberty to trample on human rights and the planet? The credibility of the Commission, Council and Parliament – ultimately of the entire EU – is at stake.”