Press Release: Leading EU Sustainable Finance Think Tank outraged by Germany’s move to kill EU Supply Chain Law

Berlin/Brussels, 06/02/2024:

Today, Germany performed a U-turn on the Corporate Sustainability Due Diligence Directive (CSDDD): The German Liberals have managed to convince the entire German government to kill the so-called “EU Supply Chain Law” through the backdoor after a final compromise had already been found among EU legislators before Christmas. What could be a truly historic agreement, could now turn into a nightmare for nature, people and businesses, says leading EU Sustainable Finance Think Tank Climate & Company.

“Under the guise of protecting German businesses, the German Liberals have decided to derail what could be one of the most effective levers to addressing environmental and social impacts globally, while actually creating a level playing field for businesses across Europe”, says Ingmar Juergens, CEO of Climate & Company. An EU Supply Chain Law would oblige companies to identify and minimise their negative impacts on human rights and the environment through their value chain. While Germany’s position does not define the results of the upcoming Council’s vote this Friday, this is a signal for other ambivalent Member States to follow suit.

Without the CSDDD, businesses would face divergent obligations in each EU Member State. “This would be a relief only to those who do not give a toss about slave labour and rainforest destruction, but a slap in the face for most companies and voters out there, who happen to care about it”, the think-tank’s lead analyst on the CSDDD Louise Simon says. But the serious social and environmental concerns aside: no CSDDD means no coherent framework. Companies will now be confronted with the complexity of non-aligned national obligations. “What businesses and financial institutions get is a bureaucratic spaghetti that diminishes their competitiveness”, Louise Simon adds. We rely on other EU Member States to be more rational than their German counterparts and act in the interest of their businesses. Now more than ever, we need all other EU Member States to vote in favour of supply chains which protect human rights and the environment.

With their decision, “the German government is not only slamming the door on EU environmental ambition but is also voluntarily missing the opportunity to set a global benchmark for building sustainable and resilient supply chains”, says Juergens. “The EU Supply Chain Law, by creating one coherent set of rules, would ease the transition to sustainable business practices also for non-EU companies in our supply chains.”

“We cannot help but express our disappointment at yet another coup by the German Liberals to derail crucial EU legislation, slamming collaborative EU policymaking. This decision brings back dark memories of Germany’s last-minute U-turn on the combustion engine phase out in 2023”, Juergens concluded.