EU Faces Pressure on Human Rights Law
Dutch MEP and CSDDD rapporteur Lara Wolters accuses governments of “political posturing” as the directive faces further delays.
The European Council’s failure to approve the EU Corporate Sustainability Due Diligence Directive (CSDDD) this week has come under sharp criticism from politicians and NGOs.
Proposed by the European Commission in 2022, the CSDDD aims to enhance environmental and human rights protections in the EU and globally. If approved, it will apply to large companies with more than 500 employees and a net global turnover of €150 million (US$164.9 million), addressing actual and potential adverse impacts across their operations and supply chains.
The regulation would notably introduce requirements for companies to identify and prevent the impacts of their activities on the environment and on human rights abuses, effectively obliging them to conduct due diligence on their own operations and that of their subsidiaries. Companies would also need to develop and implement prevention action plans, obtain contractual assurances from their direct business partners, and subsequently verify compliance.
While the EU Council reached a provisional agreement with the European Parliament last December, the approval vote has been facing delays since Germany, Finland and Italy all pulled their support on the basis of concerns over the burden that the CSDDD could place on companies.
Ahead of the vote this week, France also voiced objections, reportedly demanding that the scope of the directive be reduced and applied only to companies with more than 5000 employees, rather than 500.
Following the vote, the qualified majority of 15 member countries required to take the law forward was not reached.
“Despite the efforts of the presidency, the necessary support wasn’t found,” said the Belgian presidency of the EU Council. “We now have to consider the state of play and will see if it’s possible to address the concerns put forward by member states, in consultation with the European Parliament.”
Undermined trust
Dutch MEP Lara Wolters, who led negotiations for the CSDDD in the EU Parliament, expressed her “outrage” at the failure of member states to approve the law.
“The text that they had before them was the result of two years of careful negotiation,” she told a press conference on 28 February. “Member states were listened to carefully and able to give their input throughout the negotiation process. In the latter stages, to walk back on commitments or come up with more demands shows a flagrant disregard for the European Parliament as a co-legislator, and undermines the trust required to reach trialogue agreements.”
Wolters also suggested that business groups in France and Germany who voiced opposition to the directive supposedly “had their leaders on speed dial” to influence the outcome of the vote.
Former MEP Richard Howitt raised similar concerns, calling the “defeat” of the CSDDD “a historic failure”.
“As a former politician with 22 years’ service in the European Parliament, I find it a shocking occurrence that EU governments vote down a proposal to which they had previously given political agreement,” he said. “This is not about the merits of the argument but has been caused by fraught coalition politics in Germany and the proximity of the next European elections across the continent.”
With the elections coming up as early as June, the fear is that if the CSDDD isn’t approved in the coming weeks, it may have to be re-introduced after the vote has taken place – under a new EU Council presidency and European Parliament.
As such, Wolters indicated that her priority was to get the directive over the line before the elections. “Where there’s a will there’s a way,” she said. “I can’t speculate on when exactly or on how much time there is, but I do know that the Council is still talking about this and considering bringing it back in the next few days.”
In parallel, a coalition of 130 EU civil society organisations have called on the Belgian presidency of the Council to “rise to the occasion” and ensure a strong majority for the CSDDD. “It is a harrowing failure by EU governments to meet their obligations under international human rights law, and a green-light signal to reckless businesses that they can keep fuelling the climate and ecological crises for corporate profits,” they said in a statement.
Harmonised regulation
Additional concerns have been raised that not taking the directive forward could lead to regulatory fragmentation across Europe.
“Businesses now face the challenge of navigating a patchwork of national laws and reporting obligations concerning supply chain legislation,” said Dominique Strieder, Partner at law firm Eversheds Sutherland. “This fragmentation could pose significant operational hurdles for companies operating across EU borders, emphasising the urgent need for harmonised standards to ensure a level playing field and foster sustainable supply chain practices.”
National due diligence regulations already exist in France, Germany and the Netherlands, which the CSDDD could help to standardise.
“There remains an urgent need for an effective law that establishes harmonised rules and expectations for businesses to address their impact on people and the environment,” said Uku Lilleväli, Sustainable Finance Policy Officer at WWF Europe.
Lilleväli insisted on the crucial need for member states and the Belgian presidency to rediscuss their position and secure approval in the EU Council as soon as possible, without derailing from the agreements reached through a years-long democratic process.
“EU governments’ last-minute sabotaging and postponement of this new rulebook not only disregard the lives, communities, and ecosystems affected by destructive business practices, but also deals a blow to the EU’s credibility as a legislator,” she added.
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