CS3D Negotiations Fall Apart

The Corporate Supply Chain Due Diligence Directive (CS3D), an EU law aimed at improving human rights and environmental issues in company supply chains, may never come to be after European Council voting on the Directive fell short yesterday. ESG Today describes the vote stating:

“While a last-ditch attempt was made to approve the directive in Council today, these efforts were reportedly derailed further by a last minute effort by France to significantly scale back the scope of the new rules to apply only to companies with more than 5,000 employees, instead of the proposed 500 employee threshold, effectively removing roughly 80% of businesses from the CSDDD obligations.”

The lawmaking process surrounding the CS3D has been challenging and despite reaching a political agreement on the law late last year, resistance from Germany and Italy appears to have thrown the directive into chaos. According to a LinkedIn post from Finnish MEP Heidi Hautala, lawmakers have only two weeks to come to an agreement before the law is dead for good. EU elections in June are expected to usher in a more conservative government, and if the CS3D can barely survive the current climate, the likelihood of being passed by the subsequent government is virtually zero. While we may see some form of watered-down human rights due diligence law in the future, it will likely depart from the current legislation in meaningful ways. For now, EU lawmakers are attempting to rally, find the core of the resistance, and hammer out a version of the CS3D that can be agreed upon. A tall order for only two weeks time.

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