The European Parliament has given the green light to a weakened EU supply chain law. A large majority of MPs in Strasbourg voted for a corresponding compromise, which had previously been negotiated by negotiators from Parliament and the EU states. In the future, the requirements will only apply to a few large companies. The EU states also have to officially agree to the change, but this is considered a formality.
Specifically, large companies with more than 5,000 employees and an annual turnover of at least 1.5 billion euros will be covered by the law in the future. The original limit was 1,000 employees and a sales threshold of 450 million euros. According to the EU Parliament’s chief negotiator, Jörgen Warborn, around 85 percent of the companies originally covered fall outside the scope of application. There are estimates that around 1,500 companies are still affected.
The aim is to protect human rights
The aim of the Supply Chain Act is to strengthen human rights worldwide. Large companies should be held accountable if they profit from human rights violations such as child or forced labor. The project was vehemently criticized by companies – they particularly criticized that the bureaucratic burden was unreasonable if potential rule violations had to be checked along the sometimes complex supply chains.
According to the simplified rules, companies that violate the requirements will not be subject to civil liability at EU level – meaning that victims of human rights abuses will no longer have the opportunity to sue. If companies do not adhere to the requirements, a maximum penalty of three percent of their global net sales can be imposed. In addition, in the future there will no longer be an obligation to develop action plans for climate goals.
Merz called for complete abolition
This step was preceded by a heated political exchange. Almost a month ago, the conservative European Parliament faction around the CDU and CSU cleared the way for a weakening of the regulations with the support of right-wing and right-wing extremist parties. The EU states had previously also spoken out in favor of less strict regulations.
During his inaugural visit to Brussels, Chancellor Friedrich Merz (CDU) even called for the directive to be completely abolished. When a first compromise to weaken the EU supply chain law failed in the European Parliament, Merz called this “unacceptable” and called for a correction.