The majority of EU member states have finally spoken out in favor of a common European supply chain law. What does this mean in concrete terms for the players in the textile sector?
It's a positive sign that the EU member states have finally voted for the EU Supply Chain Law. However, it only applies to the largest companies in the EU. At least among these firms, a level playing field is finally being created. This means that companies whose profit models were based on forced labor and exploitative child labor can no longer continue. At the same time, especially in the textile sector, companies that have already operated with a focus on human rights and sustainability and thus had financial disadvantages should no longer have these, because now the same rules apply to all, at least large companies in this sector. Companies must now examine their supply chains, identify and prioritize risks to human rights, climate, and the environment. This may involve setting up complaint mechanisms and engaging in dialogue with unions to improve working conditions in the supply chains. These are clear steps that must now be taken.

What changes have been made to the original proposal for the EU supply chain law?
To briefly recap: In December of last year, after lengthy negotiations, a trilogue compromise for the law was reached among the three legislative institutions - the Commission, Council, and Parliament. Normally, confirmation by the Council and Parliament would be a mere formality. However, the FDP, a German liberal party, vigorously attacked this compromise and announced that they and in consequence the German federal government could not agree to the text. From my perspective, this was only an election campaign manoeuvre and in no way a sound critique of the law.

It is usually very difficult to pass a new EU law if Germany abstains, as it is the largest member state. This led to chaos in the EU, especially among large member states like Italy and France. Opponents of the law seized this opportunity to attack the already agreed compromise text and weaken it. The consequence is that now far fewer companies will be covered. The law will only apply to companies with more than 1000 employees and an annual turnover of over 450 million euros. This is expected to affect only about 5,500 EU companies. Particular conditions for risk sectors such as the textile industry, mining, and agriculture have been deleted. So also in these sectors, the law now only affect the largest companies, which is concerning as they are unfortunately notorious for human rights violations. Also in medium to small companies. Furthermore, the obligations for the downstream supply chain have been further restricted, excluding areas such as waste disposal and recycling, even though they should have been covered by the law. Now, there is only a very limited obligation to respect human rights and environmental law in these areas. These are the biggest changes compared to the trilogue decision.

What impact does the EU CSDDD now have on working conditions worldwide? 
Although the text of the law has been significantly diluted and weakened, the law is an important signal, especially for workers in the supply chains. Its strength that it intends to work preventively. It aims to identify risks early, to help workers avoid working under dangerous conditions in factories. It is intended to ensure that people working for the profits of large companies are finally adequately paid and can also make a living. It aims to end exploitation, to provide better regulations regarding working hours, and to make exploitative child labor and forced labor a thing of the past because they can no longer be considered legitimate means in the operations of companies.

Unfortunately, these rules only apply to large companies. We hope that, as smaller suppliers are indirectly affected, it will also have an impact on them. For large companies, this means that they will have to change their procurement practices. We see in the German law that companies are collaborating with workers and unions for the first time to improve working conditions. Through this dialogue, positive changes can already be achieved, as the relationships between workers, suppliers, and companies in the EU are strengthened. In contrast to the German law, the EU law includes a civil liability provision. In the event of damage, which should be avoided through preventive measures, this provision allows workers in Europe to more easily take legal action against companies and claim damages if it is proven that companies have acted negligently and caused human rights violations.  Until now, it has been very difficult for those affected to take legal action against companies, but this law gives them a more realistic chance of defending themselves.

What requirements will companies have to meet under the Supply Chain Directive?
Once fully enacted the law still only applies to companies with 1,000 or more employees and a minimum annual turnover of 450 million euros. The biggest step for these companies is to get to know and list their supply chains. Often, companies do not even know how many suppliers they have and how deep their supply chain goes. The following questions are important in this regard: How safe is it for my workers to work there? What wages do they receive, and can people really live on them? Is there any work with toxins involved? What are the health risks? Are people appropriately trained and protected? Do they have protective equipment available when working for example- with toxins in the leather industry during tanning? These and other risks must first be identified and then prioritized. It is not the task of companies to tackle and solve everything at once, but to minimize, eliminate, or prevent the greatest risks, so that, as in the case of Rana Plaza, there is no building collapse or fire. Companies have a duty to make efforts to eliminate risks to the best of their knowledge and to provide evidence of this to be protected from legal claims. In addition, they must consider environmental and plans obligations by assessing their climate impact and creating climate plans to reduce harm to the planet. These are fundamental obligations that come with the CSDDD.

Will companies really be overburdened by the EU Supply Chain Act?
From my perspective, this law does not overwhelm companies in the EU, especially after the Trilogue compromise was weakened. No one wants to create a law that companies cannot implement or that hinders their business operations; rather, the aim is to strengthen human rights and environmental protection. Naturally, there are initial costs and work, especially for companies that have not dealt with their supply chains in the past years and decades. It is important to note that small and medium-sized enterprises (SMEs) are only indirectly affected. However, the law includes assistance and protective measures for them. It prohibits large companies from delegating their responsibilities to smaller suppliers and offers, for example, a helpdesk and possibly financial support for SMEs. When large companies request compliance audits from their smaller suppliers, there should be no additional costs for them, ensuring that even small and medium-sized enterprises are not overwhelmed. Also, there are no additional reporting obligations or increased bureaucratic burden, as often cited by the FDP in Germany. Companies already have to produce reports in accordance with the Sustainability Reporting Directive, and the CSDDD has taken this into account by integrating these reporting requirements. Therefore, there is no need for companies to create separate reports under different laws; instead, they can be consolidated to minimize bureaucratic overhead.

Has the EU Supply Chain legislation been finalized and what steps are still pending?
No, we are not yet at the end of the legislative process. It took far too long to obtain the positive vote from the Member States in the COREPER, and now time is pressing. Following the positive COREPER vote, the law proceeded to the Parliament's Legal Affairs Committee and be approved. What we expect in the coming weeks is the vote in Parliament. However, what is still missing is the final decision of the Council of Member States. We hope that this will happen before the upcoming European elections.

How could the adoption of the EU's supply chain law affect trade and consumers in the EU?
What some feared were massive price increases for consumers in the EU due to the law. However, studies show that the costs for companies to make their supply chains compliant with human rights represent only a small portion of their revenue, which does not necessarily have to be passed on to consumers. While there are initial costs, especially for large companies affected by the law, these are not particularly high in relation to revenue. The law alone will not change the world. It will take some time to ensure that products are manufactured under humane conditions. Nevertheless, we hope for significant improvements as companies become more familiar with their supply chains, enabling them to operate more resiliently and sustainably.

Michelle Trimborn is a campaigner and coordinator at Initiative Lieferkettengesetz. As an expert in strategic communication, she works with NGOs and persons affected by human rights violations across the globe.