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BERLIN – Germany is facing a backlash after indications that the German government would oppose the long-awaited Corporate Sustainability Due Diligence Directive (CSDDD). The Directive, only agreed by the European Union Council and Parliament in December, would make EU-based companies accountable for environmental and social transgressions in global supply chains.

15 companies and networks, including ALDI SÜD, Bayer, Mars, Tchibo, KiK, VAUDE, FRoSTA, and the Global Network Initiative have now released a joint statement calling on the German Chancellor to cede to the political agreement on the CSDDD.

The statement says: “As large, medium-sized and small companies and their networks, we are very concerned that German support for the Corporate Sustainability Due Diligence Directive (CSDDD) could still be withdrawn in the final approval process.

“The political compromise on the CSDDD from December last year is based on the UN and OECD standards and thus builds on guidelines that responsible companies have been using as a reference for years. In our view, the requirements of the CSDDD are appropriate and feasible.

“The CSDDD offers a historic and, at present, the only chance for an EU-wide level playing field. Especially for German companies who comply with the German Supply Chain Act, a Europe-wide regulation means that competitive advantages at the expense of people and the environment will finally be prevented. We are therefore deeply concerned that a German abstention is currently being considered.

“We are at the end of a four-year long democratic legislative process, over the course of which the perspectives of a wide range of stakeholders were included and compromises were reached. We expect Chancellor Olaf Scholz to secure this democratically achieved compromise and thereby provide companies with legal certainty and fair competitive conditions.”

Last week, a letter by two German ministers – seen by Reuters news agency – suggested the German government would oppose the new laws.

“In the Council of the European Union, this will result in Germany abstaining, which will have the effect of a ‘no’ vote,” reads a letter from Justice Minister Marco Buschmann and Finance Minister Christian Lindner, both FDP.

The landmark EU Supply Chain law was set to be formally signed off as soon as this week. It could see companies face fines of up to 5 per cent of global sales for breaching the rules.

It had been preceded by two years of intensive negotiations, in which the German government was heavily involved. 

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