EU Parliament votes for supply chain law | tagesschau.de

The EU Parliament has approved the supply chain law. It obliges European companies to comply with human rights and environmental standards in their supply chains. The FDP’s resistance to this triggered a coalition dispute.

The EU Parliament has approved the controversial EU supply chain law. 374 MPs voted for the law, 235 against and 19 abstained in the final vote in Strasbourg. The law aims to ensure that European companies ensure compliance with human rights and environmental standards in their supply chains. The EU wants to take action against child labor, exploitation and environmental pollution.

If, for example, large fashion companies have their sweaters and pants sewn by children in Asia, the victims of such exploitation should in future be able to claim compensation under the new supply chain law. Penalties can be up to five percent of global sales.

The EU states now have to officially approve the law. But this is considered a formality, because in mid-March a sufficient majority of the EU states signaled their approval in the Committee of Permanent Representatives of the Member States.

dispute in the Federal Government

The law recently sparked controversy in the federal government. While the FDP warns against placing too great a burden on companies, representatives of the SPD and the Greens see the EU supply chain law as a major benefit for the protection of human rights.

Today’s decision overruled Germany, which had abstained at the insistence of the FDP. An abstention in the committee acts as a no vote. The federal government often cannot find a common position on important EU laws and therefore has to abstain from crucial votes.

Original law weakened

Because other countries such as Italy initially had concerns, the requirements were softened. Originally, the supply chain law was supposed to apply to companies with 500 or more employees and a global turnover of more than 150 million euros per year. However, the law that has now been adopted only applies to companies with 1,000 or more employees. The annual sales threshold is 450 million euros. The possibility of civil liability has also been weakened.

A national supply chain law has been in force in Germany since January 1, 2023. For 2023 it applied to companies with at least 3,000 employees. In 2024, this limit has been lowered and therefore applies to companies with at least 1,000 employees. Despite the weakening, the new EU regulations will go beyond the German supply chain law in certain aspects.

Large associations such as the German Chamber of Commerce and Industry (DIHK) and the Federation of German Industries (BDI) are against the supply chain law. The EU directive is “neither practical nor proportionate,” said DIHK deputy managing director Achim Dercks. However, there are also companies that are in favor of the regulations.