The EU Parliament is currently engaged in intensive negotiations on the exact details of the EU Supply Chain Act. The basis for the negotiations is the Draft Report by MEP Jörgen Warborn (EPP). The main topics under consideration are determining which companies are subject to the CSDDD, establishing if transition plans for climate change will be required, and deciding whether a civil liability framework will apply to legal violations. Another controversial topic is the involvement of stakeholders, such as trade unions and NGOs, and whether a risk-based due diligence obligation for the supply chain will be introduced or whether the due diligence obligation will be limited to direct business partners.

Major setbacks feared for the EU CSDDD

The extent of the setbacks to the EU CSDDD will depend on the majorities that can be found in the European Parliament. It is planned that the vote will ne held in the JURI Committee on 13 October and in the plenary session of the European Parliament on 20 October, with a view to subsequently beginning trilogue negotiations. The Council already agreed on its position in June. As the following overview shows, the Council position and the Draft Report by EP rapporteur Warborn propose even more far-reaching changes to the CSDDD, than those contained in the Omnibus I Commission proposal, which would lead to even more significant setbacks.

_{Source: Abridged overview from the study ‘Economic Effects of the EU CSDDD Considering the Omnibus Process’ by Prof. Johannes Jäger (et al.) (see detailed list on pages 16-21 of the study)}

Study: CSDDD promotes human rights and competitiveness

The study on the economic effects of the EU CSDDD assesses the expected consequences of the Omnibus process and analyses the positions of the European Commission, the Council and the Draft Report by MEP Warborn. The study concludes that the CSDDD in its current form is expected to have a significant positive impact on economic welfare in the Global South and positive effects on the European economy. The CSDDD would strengthen the position of workers not only in the Global South but also in the EU. While the primary focus of the CSDDD is the protection of human rights, it does not pose an obstacle to competitiveness and would strengthen the European economy. For instance, the directive promotes future-oriented specialisation, which contributes to generating profits at company level and has a positive knock-on effect on the economy as a whole. The CSDDD would also create a new global standard, representing a decisive step towards binding international social and environmental regulations that would improve Europe's long-term economic performance.

Weakening of the CSDDD significantly reduces positive effects

Any weakening of the CSDDD through the proposed Omnibus Directive, such as reducing the number of companies subject to the legislation, would significantly reduce the positive economic effects associated with the CSDDD. In addition, those provisions of the current Omnibus proposals from the Commission, the Council and the Draft Report from the European Parliament's JURI Committee, which largely limit due diligence obligations to direct business partners and weaken the provisions on civil liability, are also likely to drastically reduce the effectiveness of the CSDDD.

Overall, according to study author Prof. Johannes Jäger at an event organised this week at the European Parliament by CIDSE, the ETUC and others, the Omnibus proposals undermine the effectiveness of the CSDDD. They impose similar costs without yielding any significant real benefits. According to Jäger, abandoning the EU's position as a global standard setter in terms of competitiveness carries the risk of missing a strategic opportunity for the European economy and leave European firms vulnerable to unfair competition from companies abroad engaging in social and environmental dumping. With the European Parliament votes and trilogue negotiations ahead, the study urges support for a high-standard CSDDD.

Further information:

AK EUROPA: Economic effects of the EU CSDDD considering the Omnibus process

ETUC: New study launched on the economic benefits of the corporate sustainability due diligence directive

CIDSE: Economic effects of the EU CSDDD considering the Omnibus process

AK EUROPA: Sustainability Omnibus. Simplification of the Corporate Sustainability Due Diligence Directive or undermining human rights obligations?

AK EUROPA: Rules to Protect. Criticism of the Commission's Omnibus packages and alternatives to deregulation

AK EUROPA: Omnibus I