EU Parliament Approves Supply Chain Law

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(Brussels) – The European Parliament vote on April 24, 2024, to approve the proposed European law to require large companies to prevent and remedy human rights and environmental abuses in their global supply chains is a step forward for corporate accountability, Human Rights Watch said today. The proposed EU Corporate Sustainability Due Diligence Directive (CSDDD) seeks to introduce legal obligations for large corporations to conduct human rights and environmental due diligence in their global supply chains.

The Parliament’s vote in Strasbourg was on the 11th anniversary of the tragic collapse on April 24, 2013, of the Rana Plaza building in Bangladesh, which killed 1,138 garment workers and injured over 2,000 others. The proposed law requires large companies to conduct human rights and environmental due diligence in their own operations and in their global value chains. It considers large companies to be those with more than 1,000 employees on average and more than €450 million in net worldwide in the previous financial year. It empowers regulators to take action against companies failing to conduct such due diligence and, in some situations, allows victims of corporate abuses to approach European courts to seek justice.

“The 11th anniversary of the Rana Plaza disaster is a somber reminder of why a due diligence law is long overdue,” said Aruna Kashyap, associate director on corporate accountability at Human Rights Watch. “The European Parliament’s vote sends a strong message that the EU should no longer let large corporations get away with human rights and environmental abuses.”

The Rana Plaza disaster, alongside a range of other corporate abuses of human rights, labor rights, and environmental standards in global supply chains, have prompted rights groups, trade unions, and even some businesses to call for binding legislation to hold corporations accountable for abuses in their global supply chains.

Rights groups and social movements from around the world have campaigned for the European Union to adopt such legislation. These efforts have been critical to push back against corporate lobbying seeking to derail the proposed law.

The legislative process, which began in 2020, has been protracted and difficult, Human Rights Watch said. The governments of France, Italy, and Germany vastly curtailed the scope of the legislation, limiting its application to very large corporations, excluding certain sectors, and extending the time it would take before the directive comes into force. On March 15, a majority of ambassadors of EU member states approved the draft law, but only after significantly weakening a text that had been previously approved. On March 18, the European Parliament’s Legal Affairs Committee approved the text.

Following the European Parliament’s vote, the law now needs final approval by ministers of EU member states. The EU ministerial vote is expected to take place in late May. 

“The European Commission pledged to adopt a law to hold corporations accountable when they took office five years ago,” said Kashyap. “Ministers from EU member states should give a final nod to the text and pave the way for a new chapter on corporate accountability in global supply chains.”