Companies operating in Europe will have to ensure their supply chains do not cause environmental damage or use forced labour, according to a new law approved by the European Union.
According to the BBC, backing by a majority of EU members – 17 out of 27, with none opposing the measure – came only after substantial changes were made to the text: changes critics say dilute the law and render it ineffective.
The Corporate Sustainability Due Diligence Directive (CSDDD) will mean European companies have to provide documentary confirmation that products they import adhere to environmental and human rights standards, such as not involving child labour.
They will also be required to prevent or minimise potential harm, and to communicate their findings.
However, the BBC reports that compromises made following weeks of negotiations on the draft text mean only larger businesses that have 1 000 employees or more and which have a net turnover of at least €450m will be affected. The original limit was firms with 500 employees or more and a revenue of €150m.
Opponents warned that companies would remove themselves from the EU due to bureaucracy and legal risks.
The BBC cites Markus Beyrer of lobby group BusinessEurope, as saying that the new rules would add ‘unparalleled obligations, set harsh sanctions with potential existential implications for companies, and unilaterally expose them to litigation from all parts of the world’.
He added: ‘European companies with global operations, some with millions of indirect relationships, will be put at a disadvantage compared to their global competitors.’
According to the BBC, environmental and human rights campaigners welcomed the move to improve firms’ accountability, but voiced disappointment with the draft law.