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EU plans for company human rights, environment checks face new hurdle
Global Banking & Finance Review®
Company
By Huw Jones
LONDON (Reuters) – Lawmakers in the European Parliament sought on Wednesday to water down groundbreaking European Union rules that would require large companies to check whether their suppliers abuse human rights or damage the environment.
Parliament is due on Thursday to vote on a cross-party compromise agreed in April on the draft EU corporate sustainability due diligence directive (CSDDD).
Large companies selling products in the EU – even those headquartered outside the bloc – would have to check on their suppliers and take mitigating action if abuses or environmental damage are found.
Retailers, for example, would have to check whether the fruit and vegetables they sell in the EU were not picked by people working under squalid conditions or using child labour.
“It’s impossible to say we didn’t know,” said Lara Wolters, the centre left lawmaker sponsoring the legislation.
Companies would also have to publish plans showing how they would transition to a net zero economy.
But lawmakers from centre right and right wing parties said in a debate on Wednesday that the rules would impose red tape on companies, and harm their competitiveness as they face increased competition from China.
“They cannot be held responsible for everything their suppliers do,” Ivan Stefanec, a member of the European People’s Party (EPP), the assembly’s biggest political grouping, told the debate.
Didier Reynders, EU Justice Commissioner, said the CSDDD creates a level playing field among companies, replacing differing voluntary checks across countries.
The European Commission was already facing increased political resistance to new EU laws to protect the environment. Separately on Wednesday, EPP walked out of negotiations on a landmark EU law to protect nature.
Supporters of the CSDDD compromise say opponents are unlikely to muster enough votes to block or amend the draft law on Thursday.
A green light would open negotiations with EU states next month on a final deal.
EU states approved a position among themselves in December, which includes a national option to exclude financial services – parliament’s compromise wants them included.
(Reporting by Huw Jones, editing by Ed Osmond)
The Corporate Sustainability Due Diligence Directive (CSDDD) is a proposed EU regulation requiring large companies to assess and address human rights and environmental impacts in their supply chains.
Environmental checks involve evaluating a company's practices to ensure they do not harm the environment, including assessing supplier practices and implementing measures to mitigate negative impacts.
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