What is the current status of the EU supply chain law?
The Commission proposal for the so-called CSDDD (Corporate Sustainability Due Diligence Directive) was presented in February 2022, followed by the parliamentary vote in June 2023, after which it was announced that the trilogue could begin; the Council of the European Union had already taken a position on this in December 2022. The European Commission, the Council and the European Parliament are the three institutions that negotiate the final legislative text. After the parliamentary decision in summer, it was then possible to start the trilogue together, i.e. the inter-institutional negotiations on the final legislative text. The trilogue was successfully concluded in mid-December 2023, which means that a solution was actually found between the institutions, at a political and technical level and a provisional legislative text was agreed. What then follows are actually purely formal processes: the final text has to be coordinated in detail, translated and then voted through again by the various bodies.

What has happened now? 
A few weeks ago, just in time for the start of its European election campaign, the FDP (Editor's note: the Free Democratic Party, is a liberal political party in Germany) suddenly declared to withdraw its support of the compromise and called on the German government – where the FDP is the smallest party in a coalition of three – not to support this agreement in the Council anymore. This is problematic as the compromise has already been negotiated and Germany, including FDP ministers, have been strongly involved in this. Germany has contributed key positions and, in my view, the FDP has contributed to a significant watering down of this compromise proposal, and we can prove that.

Why is the FDP blocking the law?
The FDP is now claiming that the negotiated compromise does not meet their expectations and that they have not been able to introduce essential key positions, which is wrong; in some cases, the FDP explains its rejection with positions it never tabled in the trilogue. In addition, many false claims are being made, e.g. that way more German companies would be affected than under the German due diligence law (Lieferkettensorgfaltspflichtengesetz), which already exists. Also the claim is made that SMEs would be overburdened by the new law, although it provides for sufficient grace periods and financial support.

As things stand now, there should have been a debate by the Committee of Permanent Representatives (COREPER) on the law last Friday (February 9, 2024). There, a vote is taken to prepare the decision for the Council. Then, proceedings would have continued, the law would have been discussed in Parliament's Legal Affairs Committee on Tuesday (February 13). But the COREPER vote was taken off the agenda at short notice.

How can the FDP's concerns be addressed?
All in all, it is a hugely wasted opportunity. The directive has been negotiated for years. It is not only many politicians in Brussels, it is above all many companies that welcome the directive. There are various statements, including from large German companies. We are talking about Aldi Süd and Bayer, for example, who clearly say that they want this law. There are also smaller SMEs and family businesses, VAUDE for example, who are also in favour. A law at EU level would primarily mean that we would have a level playing field, and secondly we in Germany are one step ahead because we have already been dealing with this for several years due to the German Supply Chain Act.

Overall, we hear from the business community that many companies have already prepared themselves for the CSDDD to come. To take this law off the table now, would cause great frustration and would only help those companies who have so far completely refused to protect human rights. Those who have not yet addressed their supply chains at all, even though they know that it is high time they should. That's why the argument that it would weaken the German economy should be dismissed out of hand.

When can an actual decision be expected?
We are hoping for quick progress in the next days, but the FDP caused chaos in Brussels. In the last few days, Minister Lindner is said to have called colleagues in other EU member states, actively calling on them not to vote in favor of the law, and Justice Minister Marco Buschmann did the same in a letter to all EU member states. These are both procedures that are not only unusual, but are clearly foul play. The whole thing has caused a lot of unrest between the states, which is why this vote has been postponed.

In practice, this means that the Belgian Presidency of the Council, for whom this directive is very important, is trying to talk to and reassure other states in order to get this law through the vote quickly. We have to bear in mind that there is a lot of time pressure. The legislative period in Brussels will soon be over. A major shift to the political right is to be expected in the new European elections, and Hungary will hold the next Council Presidency, a country that is not exactly known for attaching great importance to human rights projects.

At the same time, the law has now been negotiated for several years, it is very important to many states, civil society and companies. We therefore assume that this law will successfully pass the vote in the coming weeks.

What would happen if the Corporate Sustainability Due Diligence Directive actually fails?
As I said, it is currently very important to the Belgian Council Presidency to get it passed, and not only to them, various parties and groups have worked on it. We see Lara Wolters, from the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament, the rapporteur for this law. But we also see Member of Parliaments such as Axel Voss from the German CDU/CSU, who sits in the EPP (Editor's note: European People's Party) in the European Parliament and is the shadow rapporteur for this directive, also campaigning for it, which means that we also see very, very great political will and pressure across the political groups to push this law forward in different countries.

If the directive does not pass in this legislative period, then there is theoretically still the possibility of bringing this law into the next legislative period. However, this is not desirable. We are unsure about the political landscape in the next legislation, and fear that the law could actually fall by the wayside. I am currently assuming that everyone other than the FDP is willing to negotiate and that this will therefore be successfully concluded in the coming weeks.

For Germany as a whole, this means that the pressure on Chancellor Olaf Scholz in particular is growing. Scholz has the opportunity to exercise his authority to issue directives, which means that he can certainly override the decisions of his individual coalition partners. He has already done this, for example with the asylum law reform at EU level, where he overruled the Greens. In other words, this possibility does exist.

Which consequences would the failure of the CSDDD have for the textile sector? And what would this mean for textile workers in particular?
It is no coincidence that the textile sector is defined as a high-risk sector in the CSDDD. Workers’ rights violation are unfortunately still common in this area, even more than a decade after man-made catastrophes like Rana Plaza and the Ali Enterprises factory fire and during a time where we are well aware of the often exploitative working conditions in the textile industry. The CSDDD would address these extraordinary circumstances, for example through a lower threshold for companies, this means: companies in the high-risk sector are covered by the CSDDD when they have 250 employees and EUR 40 million net turnover, as compared to “regular” companies to which the CSDDD is applied when they have 500 employees and EUR 150 million net turnover. Through this, the CSDDD could oblige many textile companies to finally exert the long overdue due diligence: identify risks to human rights, like dangerous working conditions, excessive overtime or insufficient wages, get rid of the risks and prevent them for the future. Also, we have been hearing from partners in the Global South, who are working with companies affected by the German due diligence law, that relationships between companies and suppliers in the Global South became closer, the law opened a way for better dialogue, e.g. between companies and trade unions, so there was real impact already. A failure of the CSDDD thus would also be a massive missed opportunity to improve working conditions in the textile sector, which companies – unfortunately – did not do sufficiently voluntarily so far.

Which scenario is possible?
If we don't go ahead with a European solution now, it's relatively likely that individual solutions would come about in nation states as there is a need to oblige businesses to respect human rights and the environment. This would lead to a very complicated patchwork of different solutions in different jurisdictions and would not be in anyone’s interest, as same rules for everyone seem more fair and practical.

What signals does the current situation send out?
Not good ones. In particular, the people in the Global South who work in our supply chains, often under poor, exploitative conditions, are basically being told right to their faces, especially by the German government: it's okay how things are going, it's okay that we make profits on your backs, it's okay that we exploit your raw materials and make money from them while we destroy your environment, it's okay that companies can emit CO2 en masse without expecting major penalties. And of course these are all signals, that nobody needs.

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.