News / Anger as new EU law on emissions and forced labour is 'watered down'

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Large companies in the EU are closer to having to address their contributions to global warming and use of forced labour in supply chains.

Yesterday, the European Parliament Legal Affairs Committee agreed a new directive  – but what was voted on was described as a “watered down” version that won’t have as big an impact as anticipated. 

The Corporate Sustainability Due Diligence Directive (CSDDD) will require firms to alleviate the negative impact of their activities on human rights and the environment by tackling forced labour and global warming. 

The companies will be required to enact a transition plan to make their business model compatible with the global warming limit of 1.5ºC, under the Paris Agreement.  The plan should include time-bound climate change targets and key actions on how to reach them. 

Non-compliance could lead to fines of up to 5% of a company’s net global turnover. The directive will be formalised in a plenary vote next month. 

However, Italy and Germany last week kicked back against the CSDDD proposal, stalling it and leading to the weakened directive voted on. It initially had a much wider scope and much shorter implementation period.

One of the most significant changes in the revised CSDDD reduces the number of companies falling in its scope by around two-thirds – by upping the threshold to firms with more than 1,000 employees, from 500, and to those with turnover of more than €450m, up from €150m. 

Jasmine O’Connor, CEO of Anti-Slavery International, said: “We have been outraged by the last-minute attempts by Germany and Italy to block this important law. While today’s developments are very positive, we know that the quality of the law has been eroded by these post-agreement challenges.

“Despite these losses, we applaud this progress and urge lawmakers to remain united and usher through CSDDD as swiftly as possible.” 

Her colleague, Sian Lea, business and human rights manager, added: “We have watched in horror as political and business interests have been prioritised over the rights and conditions of workers around the world. The new proposals for the law are significantly watered down.” 

Lead MEP Lara Wolters said: “It is high time this legislation was adopted to stop corporate abuse and to give companies clarity in what is expected of them. I’m looking forward to the plenary vote and confident that it will be adopted swiftly.” 

If the bill is enacted, it will take three years to come into effect. This is to allow member states time to embed the legislation into their own legal frameworks.  

David de Picciotto, co-founder of emissions calculation platform Pledge, said: “Any legislation that helps us achieve the targets set out in the 2015 Paris Agreement in a manageable way is good news. That this proposal has been watered down shouldn’t take away from the fact that it’s still a groundbreaking law that would compel corporations to take environmental responsibility for their actions. 

“This is another wake-up call for forwarders and their shippers that they need to prepare for the reporting requirements that this law and other similar legislation will require very soon.”