EU Council Delays Critical CSDDD Vote. Now What?
The European Council postponed on Friday a pivotal vote that many have characterized as mandatory supply chain oversight’s make-or-break moment.
The so-called “done deal” that was the corporate sustainability due diligence directive, or CSDDD, has turned out to be not so done or dealt with. Germany and Finland’s 11th-hour declarations of abstention, plus reports of cold feet from Italy and Sweden, have revealed fractures in a once-unified resolve to task big businesses with identifying and addressing harmful environmental and human rights impacts in their supply chains.
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“The #Lieferkettenrichtlinie did not find a majority today,” German finance minister Christian Lindner, leader of the co-ruling and pro-business Free Democratic Party (FDP), wrote on X, formerly known as Twitter, on Friday, using a German term for supply chain policy. “It would put a massive burden on companies without secure progress for human rights and the environment. The (long-known) requirements of the federal government were not met. And Germany is obviously anything but alone with its concerns.”
The European Council’s Belgian presidency moved the vote to next Wednesday—Valentine’s Day—after it became unclear if there would be enough representatives from the 27 member states in support of the rule. A “qualified majority” requires 15 countries representing at least 65 percent of the European Union’s population, while a “blocking minority” must include at least four countries representing more than 35 percent of EU citizens. An abstention under qualified majority voting counts as a “no” vote. There were worries that a blockade by Germany would embolden on-the-fence nations to do the same; those worries appear to be coming true.
Reactions to Germany’s stonewalling were already fast and furious. On Wednesday, the European Coalition for Corporate Justice, an assemblage of 480 civil society groups across the continent, dubbed the move a “betrayal” of the previous consensus led by a “minority” party—meaning, the FDP—polling at only 4 percent of support. A raft of German businesses, including Aldi, Bayer, Tchibo, KiK and Vaude, quickly dispatched a shared statement expressing concern that support for the CSDDD could be withdrawn in the final approval process. In their view, the measure’s requirements are “appropriate and feasible” and the “only chance for an EU-wide level playing field.” Plus, compromises and concessions have already been made, they said.
Isabella Ritter, EU policy officer at ShareAction, a responsible investment platform, went so far as to call the delay a “failure of leadership” that jeopardizes lives and the well-being of the planet.
“The decision to postpone the vote on CSDDD is outrageous,” she said in a statement. “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. 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 heavily negotiated compromise for the CSDDD is in the direct interest of workers, the environment as well as business,” Alexander Kohnstamm, executive director of the Fair Wear Foundation, a multi-stakeholder organization based in the Netherlands, told Sourcing Journal. “This message is shared by the German garment sector. The unison calls from responsible businesses and civil society must be heeded. And the many European companies that already take their due diligence seriously should be acknowledged. Further delay is in nobody’s interest.”
Peter McAllister, executive director of the Ethical Trading Initiative, whose roster includes brands such as Bestseller, H&M Group and Primark, said that he’s very concerned about any action that undermines the possibility of an EU-wide regulation.
“The risk is we end up with a patchwork of national regulations that are not in line with the UNGPs,” he said, using an acronym for United Nations Guiding Principles.
The CSDDD and the brewing forced labor regulation are closely interlinked. Both require companies to know where their goods are produced and under what conditions. The biggest difference between the two is that the latter allows authorities to ban specific products from entering the world’s largest single market or, conversely, leave the EU for countries outside the bloc.
“Research has shown definitively that goods at a high risk of being produced with Uyghur forced labor, in particular, are still entering the EU market,” Peter Irwin, associate director for research and advocacy at the Uyghur Human Rights Project, a nonprofit based in Washington, D.C., told Sourcing Journal. “Loopholes in the EU’s current legislative framework must be closed by this law—as well as the upcoming EU forced labor regulation—to make sure companies are compelled to root out these kinds of abuses.”
Toppling the CSDDD, in a worst-case scenario, doesn’t necessarily put the forced labor regulation in peril, however. Standing up against a law designed to prevent modern slavery would be a bad look, Irwin said. Opposing a more expansive supply chain rule offers some moral latitude, though not much.
“When the FDP and parts of the business community say this law amounts to ‘administrative burdens’ for companies, what they’re really saying is that they don’t want to be forced to ensure their supply chains are free from forced labor or other human rights abuses,” he added.
Both the CSDDD and the forced labor regulation are “integral” to ensuring that goods consumed in the EU are not made with forced labor, said Sian Lea, business and human rights manager at Anti-Slavery International, a human rights group headquartered in London. The International Labour Organization estimates that 17.3 million people toil under conditions of forced labor in the private sector worldwide. Another 3.9 million are being subjected to state-sponsored modern slavery.
“With every delay, the CSDDD [is] at a further risk of not passing,” she said. “This law has the potential to transform the conditions for people working throughout value chains and it’s disappointing to see the compromise reached by the Belgian presidency be potentially undermined.”
While the process of getting the forced labor regulation off the ground faces “similar frustrations,” Lea is cautiously optimistic: “We are hopeful that both laws are passed with urgency and with integrity,” she said.
On X, Isabelle Schömann, confederal secretary of the European Trade Union Confederation, which represents the members of 93 trade union organizations, was likewise sanguine. The vote may be postponed, she said, but the “battle to hold businesses accountable for human and environmental rights violations is far from over; on the contrary!”
But Nazma Akter, president of the Bangladeshi union Sommilito Garments Sramik Federation, said that workers cannot wait. Two decades of voluntary corporate social responsibility schemes, campaigners say, have shown them to be toothless, with justice, let alone remediation, for victims of wage theft and other labor rights abuses never a sure thing. The CSDDD could change that.
“Unions have long been calling for mandatory due diligence rules to secure workers’ rights along the supply chains,” she wrote on LinkedIn.
