EU governments back stricter checks on forced labor & environment, but Germany abstains due to Free Democrats’ concerns.
Representatives of EU member states endorsed a new law aimed at safeguarding human rights in supply chains, holding large corporations accountable for profiting from child or forced labor outside the EU or causing environmental harm.
The “corporate sustainability due diligence directive,” or European Supply Chain Act, garnered support from 17 ambassadors representing 65 percent of the EU population, meeting the “qualified majority” required for its advancement to a final vote in the European Parliament. Applicable to companies with over 1,000 employees and annual revenues exceeding €450 million ($490m), the law will be phased in over five years, starting with larger corporations.
Despite overall support, Germany, the EU’s largest economy, abstained, citing divisions within its governing coalition. While the Social Democrats (SPD) and Greens endorse the law, the pro-business Free Democrats (FDP) fear increased bureaucracy and economic burden, highlighting concerns over potential risks outweighing benefits. The German Chamber of Commerce and Industry (DIHK) and BusinessEurope expressed apprehensions about the law’s practicality and its potential adverse effects on European companies’ competitiveness.
