Representatives of the Member States engaged in 12 rounds of negotiations between February to November 2022 to adopt a common negotiating position. In many respects, the now published compromise equals the proposal of the EU Commission. However, with regard to an already too narrow scope, it contains further restrictions. Hence, the financial sector shall be exempted and Member States shall only have the option of voluntarily subjecting this sector to due diligence and sustainability obligations. While thresholds remain high, thereby continuing to comprise an extremely small share of companies in the EU, the timeframe for implementation has also been extended. According to the Council, the provisions shall only apply four and five years respectively (depending on the size of the company) after the Directive enters into force. Applying the provisions three years after entry into force already, has been supported only in respect of very large companies with more than 1000 employees and more than 300 million euro net revenue.

One positive aspect of the Council compromise is that trade unions are now explicitly mentioned as stakeholders. However, integrating the different representations of interests in a company’s entire due diligence process still remains improvable.

A critical view to be taken of Austria’s role

At national level, AK, together with ÖGB and civil society organisations, actively participated in the legislative process. There was widespread involvement on part of the ministries and an open debate, which was expressly welcomed by AK. Apart from that, AK is also supporting the European campaign ”Justice Is Everybody’s Business”, which was launched in September 2022, addressing European decision makers with their demands for a comprehensive and fair EU Supply Chain Law.

Prior to the decisive ministerial meeting on 1 December 2022, AK president Renate Anderl personally addressed Federal Minister of Labour and Economy Martin Kocher, urging him – apart from agreeing to the EU Supply Chain Law – to also support a strong regulation, which includes the incorporation of the financial sector in the scope of the Supply Chain Law. However, Austria abstained from the final Council vote and was therefore not among the countries, which got the general approach in the Council off the ground. In particular due to the previously constructive modus operandi by the responsible departments, the abstention of Federal Minister of Labour and Economy Kocher evoked incomprehension and disappointment with the Austrian supporters of the EU Supply Chain Law.  

Further steps

On 7 November 2022, Rapporteur Lara Wolters (S&D), presented a very ambitious Draft Report on the EU Commission’s Directive proposal at a meeting of the responsible European Parliament's Committee on Legal Affairs (JURI). The vote by the JURI Committee has been scheduled for spring 2023. Afterwards the plenum of the EU Parliament will decide on the Report. In doing so, the EU Parliament will also have adopted an official position. Then, the so-called “trilogue negotiations” with EU Commission and EU Council may begin. It should be the aim to definitely finalise the Dossier within this legislative period, hence by May 2024, because otherwise significant delays have to be expected. In the interest of victims of human rights violations, it should be the aim of all negotiators, to adopt a comprehensive and effective EU Supply Chain Law as soon as possible.

Further information:

AK EUROPA Position Paper: Directive on Corporate Sustainability Due Diligence

Council of the European Union: Council adopts position on due diligence rules for large companies

AK Wien: AK Anderl to Kocher – “Vote for a fair EU Supply Chain Law!“ (German only)

Campaign “Justice Is Everybody’s Business”