Weakened corporate sustainability law crosses finish line: European Parliament gives green light

Brussels, 24 April – Today the European Parliament rubber-stamped a new harmonising law on human rights and environmental due diligence for corporate giants, listening to the clarion call from hundreds of citizens, civil society and businesses. The Corporate Sustainability Due Diligence Directive (CSDDD) passed despite 235 votes against and 19 abstention. Jennifer Kwao, Trade & Corporate Accountability Campaigns Officer at CAN Europe said: “Today’s vote sends a strong signal that the EU will no longer tolerate misconduct and environmental destruction by corporate giants on its shores and elsewhere. This is a welcome page-turner for victims of corporate abuse. Though severely weakened, CSDDD gives them a fighting chance against corporate giants.” The vote is a milestone step in cleaning up supply chains after cases like the Rana Plaza factory collapse and contamination of the Niger Delta highlighted the impunity of big companies. Besides access to justice, the CSDDD requires companies to adopt science-based transition plans, which is a notable attempt by the EU to align corporate activities with climate goals and ensure they manage the transition responsibly. However, the adopted law is another victim of recent political pushback by EU member states. Last-minute efforts by a few member states, including Germany, Italy and France, succeeded in weakening the CSDDD and introduced concerning loopholes. The law will now only apply to EU companies with at least 1000 employees and a global turnover of 450 million euros. This eliminates almost 70 per cent of companies initially targeted by the law*. Mention of high-impact sectors (e.g. construction and mining) and a lower threshold for them have been scrapped. Compromised wording on the implementation of climate plans also raises concerns. Moreover, the financial sector is largely excluded from the scope of this law. Nevertheless, the CSDDD is meaningful for obliging big corporations to investigate and address human rights and environmental risks in their global value chains. It is a step in the right direction away from voluntary standards. Jennifer Kwao added, “Today’s vote should not be considered the finish line but rather the beginning of the marathon for corporate accountability and justice. Any redemption for member states and the EU lies in strong enforcement of the adopted law. No more slaps on the wrists for abusive corporate giants. Starting with member states, the EU must keep a keen eye on them for swift and proper transposition of the law. And it should be ready to take them to task for failing to meet their legal obligation.” *The Commission had estimated that 15,000 companies would be within the scope of initial drafts of the law. It now puts this figure at 5300 after the latest revisions to the law’s scope.

Note to editors:

The law passed in the EU Parliament will still go to the EU Council for final approval in May. Member states will then have two years to transpose the law into national law after it goes into effect. This brings the timeline for implementation to the following:

2027: companies with 5000 employees and 1.5 million in turnover
2028: 3000 employees and 900 million in turnover
2029: 1000 employees and 450 million in turnover

For more information and media requests: Jani Savolainen, Communications Coordinator jani.savolainen@caneurope.org

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Weakened corporate sustainability law crosses finish line: European Parliament gives green light

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