Despite resistance, the EU supply chain law has now been passed

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Despite strong resistance in several Member States, the controversial EU supply chain law was finally approved on Friday – without the votes of Germany and Austria! Several attempts had to be made to reach a common compromise. EU countries now have two years for national implementation.

The law, which aims to hold major companies liable if they profit from child or forced labor outside the EU, had previously failed to gain an overwhelming majority in the EU Parliament: 374 MPs voted in favor of the project, 235 against (19 abstentions). However, the scope is considerably limited. While the agreement between the EU countries and the EU Parliament stated that the directive should apply to companies with 500 employees and a turnover of EUR 150 million, it should now only apply to companies with 1,000 employees and a turnover of 450 million euros.

Compliance with the Paris climate goals also plays a role
A risk-based approach and transition plans are also planned. Sanctions can include mentioning a company’s name or fines of up to five percent of the company’s global net sales. Larger companies must also have a plan in place to ensure their business model and strategy is compatible with achieving the Paris climate goals.

Italy made the decision possible
The federal governments of Germany and Austria have been major critics of the regulations. They complained, among other things, that the documentation obligations were difficult to meet. Berlin abstained under pressure from the FDP. Austrian Minister of Economic Affairs Martin Kocher (ÖVP) also disagreed with the proposal. After Italy gave up its resistance, the necessary majority of EU member states was reached.

Source: Krone

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