European Parliament Passes Law on Supply Chain Accountability
The new law requires large companies to prevent and address human rights and environmental abuses in their global supply chains.
As the demand for corporate responsibility increases, The European Parliament took a huge step toward increased corporate responsibility on Wednesday by passing a new law requiring large companies to prevent and address human rights and environmental abuses in their global supply chains. Human Rights Watch hailed this decision as a crucial step forward.
The EU Corporate Sustainability Due Diligence Directive (CSDDD) states that companies with more than 1,000 employees on average and over USD 480 million in net revenue from the previous financial year would be subject to these obligations.
The new law was passed on the 11th anniversary of the tragic Rana Plaza building collapse in Bangladesh, which killed 1,138 garment workers and left more than 2,000 others injured. The proposed law not only mandates due diligence within a company's operations but also extends responsibility to its global value chains.
The new law allows regulators to take action against companies falling short of these new obligations and provides avenues for victims of corporate abuses to seek justice through European courts in certain situations.
“The 11th anniversary of the Rana Plaza disaster is a somber reminder of why a due diligence law is long overdue,” said Aruna Kashyap, Associate Director on Corporate Accountability at Human Rights Watch. “The European Parliament’s vote sends a strong message that the EU should no longer let large corporations get away with human rights and environmental abuses.”
The final step in the legislative process involves approval by ministers of EU member states, anticipated to occur in late May.
“The European Commission pledged to adopt a law to hold corporations accountable when they took office five years ago. Ministers from EU member states should give a final nod to the text and pave the way for a new chapter on corporate accountability in global supply chains,” Kashyap added.
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