The EU Supply Chain Law has been significantly watered down by the EU Parliament under pressure from industry. A guest article by Juliane Kippenberg.

At the climate summit in Brazil, Germany supported a roadmap for phasing out fossil fuels. Germany will hardly want to be accused of bowing to the fossil fuel industry led by Exxon. But on its own doorstep, in the European Union, that is exactly what could happen now.

A majority in the European Parliament in Brussels has just passed a resolution that could further exacerbate the climate crisis: it has removed the obligation for companies to draw up climate plans from the EU Supply Chain Act and has also watered down the EU Supply Chain Act, a core element of the EU Green Deal, beyond recognition. What is going on?

Under massive pressure from the fossil fuel and chemical industries, as well as the governments of the US and Qatar, the conservative party group led by its chairman Manfred Weber (CDU), together with parties on the far right, decided on November 13 to turn the EU Supply Chain Act (Corporate Sustainability Due Diligence Directive, CSDDD) passed in 2024 to protect human rights and the environment into a toothless tiger: Following the EU Parliament’s decision, companies no longer need to draw up plans with climate-related measures. An EU-wide liability regime was also scrapped. This liability regime would have made it easier for victims of human rights violations, such as survivors of corporate-induced disasters, to access the courts. Most seriously, however, over 70 percent of the companies originally covered by the law are to be exempted altogether, and it will only apply to companies with more than 5,000 employees.

Some business associations attempted to defame the EU Supply Chain Act as a bureaucratic monster as soon as it was passed in June 2024. A few months later, EU Commission President von der Leyen presented a proposal that included far-reaching weakening of the law. Civil society was largely excluded from the process.

But all is not lost yet. The decisive final negotiations between the EU Parliament, the EU Commission, and the EU member states are currently taking place. In this trilogue, Germany, as the most populous and economically powerful country in the EU, has a central role to play. The German government should now make it clear that it is committed to robust human rights regulations and will not support a paper tiger like the amendment passed by Parliament. The crucial elements of the EU Supply Chain Act must be preserved: applicability to companies with 1,000 or more employees; EU-wide liability rules; mandatory climate plans; and binding, risk-based due diligence for companies throughout the supply chain. The latter means that companies must identify the risks of human rights violations and environmental damage in their supply chains and take measures to prevent and remedy them.

When companies neglect human rights, it can have catastrophic consequences for those at the bottom of the global supply chain. In 2019, a tailings dam collapsed at an iron ore mine in Brazil, killing at least 250 people in a wave of toxic sludge. Exploitation, environmental destruction, and other abuses in global value chains continue to be commonplace. Strong EU supply chain legislation protects human rights and the environment in global supply chains. At the same time, it creates legal certainty for companies.

Uneven and weak EU-wide rules on supply chains, on the other hand, are not in the interests of the economy. Recently, 88 companies from Germany and other European countries, including Aldi Süd and Tchibo, together with 134 investors and financial institutions, called for the commitment to climate plans in the EU supply chain law to be maintained and for core elements of the law to be preserved.

It is to be hoped that the entire federal government will follow this logic and stand firm in the trilogue in favor of a law that actually protects human rights and the environment in supply chains.

However, if the CDU continues to pursue the destructive course of the EPP in the EU Parliament, then the SPD, as the originator of the German supply chain law, should make it clear that it will not tolerate a global erosion of human rights standards by corporate lobbies and will therefore not agree to such a law. To this end, the SPD will have to ensure that the CDU does not ignore the position of its coalition partner, as happened in May this year during a vote by the member states on the EU supply chain law.

The European Green Deal, together with a strong EU supply chain law, is the political centerpiece that is supposed to lead Europe into a sustainable, more just future. The German government must hold fast to this goal.