EU softens crackdown on child labour, pollution in supply chains

EU softens crackdown on child labour, pollution in supply chains

By Huw Jones

European Union presidency Belgium has proposed diluting and a longer phase-in for rules that would require big companies to disclose whether their supply chains harm the environment or employ child labour, a document showed on Wednesday.

The Corporate Sustainability Due Diligence Directive (CSDDD) has been rejected by Germany and snubbed by others, leaving it stalled despite a provisional "trilogue" deal reached by representatives of EU states and the European Parliament.

German ministers had said the draft law would increase bureaucracy and legal uncertainties.

After 13 EU countries abstained, and one country opposed the trilogue text in a vote by EU member state representatives last month, Belgium - which currently holds the EU's rotating presidency - has moved to try to broker a new deal.

"The Presidency considers that the overall compromise proposed is balanced and should enable an agreement on the text," the document said.

Fewer companies would be affected and those in scope would have longer to comply.

"The general thresholds of the proposal have been increased, in order to reduce the number of EU and non-EU companies that would fall under the scope of the directive, from 500 employees to 1,000, and from 150 million euros of turnover, to 300 million euros," the document added.

The rules have also been tweaked to apply only to business partners of companies that "carry out activities for the company or on behalf of the company", thereby deleting a reference to indirect relationships.

Regarding climate change transition plans, the obligation for companies above a certain threshold to promote the implementation of the plan, including through financial incentives, has been deleted, the document showed.

"All references to financial activities in the downstream part of the chain of activities, as well as references to the specificities of the financial sector in the due diligence procedure have been deleted," it added, effectively removing banks and other financial firms, leaving them only to assess their own activities.

The Belgian compromise also proposes a staged approach to introducing the rules over three to five years, depending on the size of the company.