What is the EU supply chain law?
Harald Rettich, Head of Corporate Partnerships at myclimate and spokesperson for the Berlin-Brandenburg regional group of the Association for Sustainable Business (BNW):
The EU’s proposed supply chain law, or more specifically the Corporate Sustainability Due Diligence Directive (CSDDD), aims to create a framework for minimum standards of responsible, entrepreneurial conduct. The fact that the European Council and the European Parliament had already provisionally agreed on the CSDDD was seen as a milestone for the protection of human rights and environmental regulations. The directive would have required companies across the EU to identify and prevent the negative impact of their activities on human rights and the environment along their supply and value chains. Incidentally, this would also have affected third-country companies that operate in the EU.
Why did the EU supply chain law fail?
Following Germany’s announcement that it would abstain from voting on the CSDDD, the agenda item was removed at short notice. No date has yet been set for another vote. This delay, which I hope does not signal the complete failure of the law, is completely out of step with the climate crisis and the 1.5-degree target. What we need, here and now, is energetic, joint action by as many players as possible. In Germany, at the EU level and worldwide. As an organisation that is committed to a net zero society and has embarked on this path together with its business partners, I have to say: Germany’s abstention from the EU vote is irresponsible! It makes it difficult for companies to focus on sustainability and climate protection. This removes an important means of realising the objectives of the European Green Deal and tackling global sustainability challenges.
What does this mean for companies and climate protection?
For more than 20 years, we have been working with companies from all sectors that are pioneers in advancing climate protection. The EU supply chain law would have rewarded this forward-looking behaviour and created a level playing field within the EU. The CSDDD is both an opportunity for the economy and a building block for preserving the future of our planet.
For example, German companies that have already adapted to the requirements of the German Supply Chain Act (LkSG), and would have benefited from a uniform, binding framework at the European level, are now falling behind. Companies from other countries are also feeling the effects. Austria’s national supply chain law was initially blocked for internal political reasons and due to the expected EU regulation. Companies based at myclimate’s location of Austria are now facing economic uncertainties.
Therefore, I very much hope that the EU will return to the CSDDD, but I do not expect this to happen before the European elections in June. In terms of climate protection, the CSDDD is, quite simply, an important building block of the European Green Deal target of enabling an economy that no longer emits net greenhouse gases by 2050. Unfortunately, time is not on the side of our climate.
Will this failure also affect the upcoming Corporate Sustainability Reporting Directive (CSRD)?
Like the CSDDD, the CSRD is grouped under the umbrella of the EU’s “Green Deal”. However, the different initiatives are independent of each other. So it is important to stress that the rejection of the vote on the EU supply chain law does not change the fundamental objective of the European Green Deal or the EU CSRD reporting requirement. This means companies have to continue preparing to present a management report on sustainability aspects. In Germany, this will apply to about 15,000 companies in the future instead of about 550, and across the EU the number will rise from 1,600 to 49,000. We are currently helping many companies in Germany and Austria to adapt quickly to the new requirements. Even with the date of entry into force fast approaching, we are still seeing a lot of uncertainty in enquiries and discussions with our customers. So together with our partners and experts, we are supporting companies in their preparations and in their individual climate protection targets.
Your contact partner in Germany: Harald Rettich, Head of Corporate Partnerships Germany
Your contact partner in Austria: Christof Fuchs, Managing Director Austria, Co-Managing Director myclimate Foundation