The EU Council has postponed a make-or-break vote on the Corporate Sustainability Due Diligence Directive (CSDDD) as planned abstentions from Germany, Finland and Italy would likely lead to an outright rejection of the bill.
The European Council was due to vote on the directive last Friday (February 9), but decided to wait after realising the bill would likely not get the ‘qualified majority’ (15 EU countries representing at least 65% of the population) needed to pass.
No new date has been set yet, but one unnamed diplomat reportedly said the vote would now happen this week, on February 14. Negotiators will likely spend this time trying to garner more support for the bill after Germany, Finland and Italy signalled that they would abstain, which effectively amounts to a ‘no’ vote.
Sustainable investment group ShareAction called the delay “a failure of leadership that threatens human rights and the environment”, with EU Policy Officer Isabella Ritter, adding: “The decision to postpone the vote on CSDDD is outrageous. It is a game-changing piece of legislation with the power to uplift global human rights and environmental protection that has been stalled by member states, led by Germany. This delay is a leadership failure, jeopardizing lives and the well-being of the planet. The stakes are too high, and we urge all EU Member States to move beyond self-interest, return to the table and ensure the passage of this crucial law as soon as possible.”
The countries that plan to abstain have argued that the law would place too much red tape on companies, but several business groups have supported the law, saying it is “appropriate and feasible”.
What next for CSDDD?
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.
The EU Council and Parliament reached a provisional deal in December on the details of the text. At the time, the law appeared headed for easy approval, but now its fate appears uncertain.
European citizens are set to elect new members of parliament in June, which means all legislative work will be paused in April. If the directive is not passed before then, it could face even more resistance after the election, which is predicted to result in a shift to more right-wing, conservative leadership.