Despite resistance

EU supply chain law has now been passed

A factory worker in Uganda

(Bild: APA/AFP/Badru KATUMBA)

Despite major resistance in several member states, the controversial EU supply chain law was finally approved on Friday - without the votes of Germany and Austria! Several attempts had to be made to reach a joint compromise. The EU countries now have two years for national implementation.

The law, which is intended to hold large companies accountable if they profit from child or forced labor outside the EU, had not previously achieved an overwhelming majority in the EU Parliament: 374 MEPs voted for the project, 235 against (19 abstentions). However, the scope of application was significantly restricted. While the agreement between the EU member states and the EU Parliament stipulated that the directive would apply to companies with 500 employees and a turnover of 150 million euros or more, it will now only apply to companies with 1000 employees and a turnover of 450 million euros or more.

Compliance with the Paris climate targets also a factor
A risk-based approach and transition plans are also planned. Penalties could include, for example, being named and shamed or fines of up to five percent of the company's global net turnover. Larger companies must also draw up a plan to ensure that their business model and strategy are compatible with compliance with the Paris climate targets.

Italy facilitated the decision
Major critics of the regulations were the German and Austrian governments. Among other things, they complained that the documentation requirements could hardly be met. Berlin abstained under pressure from the FDP. Austrian Economics Minister Martin Kocher (ÖVP) also did not agree to the proposal. After Italy gave up its opposition, the necessary majority of EU member states came together.