Endorsement of the EU Supply Chain Act
The EU Supply Chain Act (Corporate Sustainability Due Diligence Directive, CSDDD) obliges large companies to take responsibility for the impact of their business activities on human rights, labour rights and the environment along global supply chains. A provisional agreement was reached between the Council and the EU Parliament at the end of 2023. Confirmation by the EU Member States was supposed to be a mere formality, but things turned out differently. The EU Supply Chain Act only reached the required qualified majority at the third attempt. Previously, its adoption in the Committee of the Permanent Representatives of the EU Member States had been postponed and even failed temporarily. This was due to massive lobbying by business and industry associations as well as Germany's abstention, which was announced at the beginning of the year. Finally, the qualified majority was reached on 15 March 2024; however, Germany, Austria and several other Member States abstained, which is equivalent to a dissenting vote at EU level. AK and ÖGB criticise the fact that the Austrian Minister of Labour and Economy, Martin Kocher, has not been constructive throughout the negotiation process.

Narrow company scope
The compromise adopted contains some changes compared to the agreement reached in December 2023, with the current, weakened directive covering companies with more than 1,000 employees and a net annual turnover of more than 450 million euros. It furthermore provides for staggered application: Depending on the size of the company, the CSDDD will apply three, four or five years after coming into force. The compromise agreed in December 2023 would have covered companies with more than 500 employees and a net annual turnover of more than 150 million euros. This means that 70 % fewer companies will be covered by the directive now compared to the December 2023 version, namely only around 5,400 instead of around 16,400 companies.

Prevailing against the business lobby
Nevertheless, the adoption of the EU Supply Chain Act is considered a success from AK's point of view. After a long legislative process, heavily influenced by lobbying from industry and business associations, it is now positive that the directive has been endorsed by EU Member States. The responsible Legal Affairs Committee of the EU Parliament (JURI) also adopted the EU Supply Chain Act on 19 March 2024 with 20 votes in favour, four against and no abstentions. Trade unions, NGOs and supporters of the Europe-wide "Justice is Everybody's Business" campaign, including AK and ÖGB, welcome this. Wolfgang Katzian, President of ÖGB and ETUC, calls the adoption a milestone: "This means that the long-negotiated paradigm shift from voluntary commitments to binding regulations to respect human, labour and trade union rights and to protect the environment can finally be initiated."

EU ban on products from forced labour
The Council and the EU Parliament also reached an agreement on the EU ban on products from forced labour at the beginning of March 2024. In contrast to the EU Supply Chain Act, which is aimed at the behaviour of companies, the product ban is about removing the relevant products from the market. The Regulation prohibits the import, making available or placing on the market of the products in the EU, as well as their export. The Committee of Permanent Representatives of the EU Member States confirmed the provisional agreement on 13 March 2024. The two responsible committees of the EU Parliament, IMCO (Internal Market and Consumer Protection) and INTA (International Trade), also adopted the agreement by a large majority on 20 March 2024.

In the future, national authorities will lead investigations in cases of forced labour within the EU, while cases outside the EU will be handled by the EU Commission. A database with up-to-date information on forced labour risks will also be provided. AK and ÖGB welcome the EU ban on products from forced labour, but also identify weaknesses. For example, the regulation does not include compensation for forced labourers and places the burden of proof on the authorities or the EU Commission instead of the companies. Nevertheless, the EU ban on products from forced labour is an important addition to the EU Supply Chain Act.

Around 27.6 million people worldwide are currently affected by forced labour, the majority of them in the private sector. Around 236 billion US dollars in illegal profits are generated annually through forced labour, according to a recent report by the International Labour Organization (ILO). During the presentation of the report, the need to combat the causes of forced labour and ensure the comprehensive implementation of the regulation was emphasised.

What happens next?
The Supply Chain Directive and the Forced Labour Regulation still need to be formally adopted by the plenary of the EU Parliament and the Council before they come into force. The EU Member States then have two years to transpose the Supply Chain Directive into national law. The Forced Labour Regulation will apply three years after it comes into force.  

Further information:
AK EUROPA: Trilogue agreement on EU supply chain law: Milestone for human rights and the environment
AK EUROPA: Corporate responsibility for violation of human and labour rights along supply chains
EU Parliament: First Green light to new bill on firms' impact on human rights and environment
Council: Council and EU Parliament reach agreement on ban on products made with forced labour
AK EUROPA: Prohibiting products made with forced labour form the Union market
AK EUROPA: 75 years of the Universal Declaration of Human Rights. How can we put an end to forced labour products?