An agreement has been reached on the EU’s supply-chain due diligence law. Negotiators from the EU member states and the European Parliament reached a deal overnight from Monday to Tuesday, with the outcome being a significantly watered-down version of the original proposal. The requirements will now apply only to a limited number of large companies. Only companies with more than 5,000 employees and an annual turnover of €1.5 billion will fall within the scope of the legislation.
The central idea behind the so-called omnibus law had been to ensure that companies could be held accountable if they benefited from situations in which human rights were not respected.
Under the new compromise, however, only firms employing more than 5,000 people and generating at least €1.5 billion in annual turnover will be covered. In addition, EU-level civil liability has been removed, meaning that potential victims will not be able to file their own complaints. Companies that fail to comply can face fines of up to 3% of their global net turnover.
The run-up to the deal had been marked by fierce disputes within the European Parliament, as the centre-right European People’s Party (EPP) had pushed for substantial changes, which were ultimately adopted with the support of right-wing parties. As a result, the supply-chain law is likely to become the first major piece of legislation to pass through Parliament with a right-leaning majority.
