Corporate sustainability rules postponed on German, Italian qualms

A supposedly routine vote on the EU’s due diligence law has been postponed, signaling trouble ahead.

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New EU rules requiring companies to check supply chains for environmental and social issues have been put on hold, with intended abstentions by Germany and Italy threatening to block the measures entirely.

The Corporate Sustainability Due Diligence Directive was politically agreed with lawmakers in December, but a supposedly routine vote by ambassadors to endorse the deal today (9 February) was abruptly cancelled, signalling roadblocks ahead.

Diplomatic sources confirmed Italy’s intention to abstain on the law, which together with other sceptics such as Germany and Austria would effectively block it.

The due diligence law compels companies to verify their suppliers’ carbon footprints or use of forced labour – but business groups have worried it’s a bridge too far.

A spokesperson for the Belgian government, which currently chairs the EU’s Council grouping of member states, confirmed the plan to delay the vote in a post on X.

The vote will be rescheduled to a date yet to be announced, Niels Timmermans added – something likely due to fears that the plan wouldn’t have mustered the required qualified majority of governments.

Germany’s U-Turn on the law earlier this week, echoing a previous attempt to stymie car emissions rules that will see internal combustion engine production ceasing by 2035, has met with criticism from Brussels and Berlin. 

 As reported, there were jitters about today’s meeting of diplomats, though Belgium appeared optimistic of its chances to shepherd agreement yesterday. 

“We believe this contributes to a level playing field,” the Green Party’s Sven Giegold, State Secretary in the German Economy and Climate Ministry, said of the due diligence law this morning, arguing in favour of a single European standard.

Berlin was “forced to abstain”, Giegold told reporters, after the pro-business Liberal FDP party, one of three in the current coalition, voiced its opposition.

Lara Wolters (Netherlands/Socialists and Democrats), who led negotiations for the European Parliament, said the German U-Turn was “putting politics over people and planet” in a post earlier this week on X – a view shared by many activists.

“The victims of any U-turn will include people who work under exploitative conditions, who lose their homes due to illegal evictions or who become ill due to environmental pollution,” Amnesty International’s Policy Advisor on Business and Human Rights Hannah Storey said in a statement given before the vote, saying the law ensures big business is “not making profits on the back of human suffering”.

For Uku Lilleväli, Sustainable Finance Policy Officer at the European office of green lobby WWF, last-minute attempts to block the law “seem driven by short-sighted and populist manoeuvres, based on a flawed rationale.”