We previously wrote about how negotiations surrounding the EU’s Corporate Sustainability Due Diligence Directive (CS3D) fell apart at the 11th hour, plunging the Directive’s future into uncertainty. Last week, lawmakers attempted to salvage the agreement and reach a compromise with the holdouts. These efforts were in vain as a final vote on the legislation was once again delayed. Responsible Investor discusses the process stating:
“As it stands, the vote is being rescheduled for next week and could take place on Wednesday or Friday when member state representatives are due to meet. EU lawmakers will have to endorse the text in the same week before all legislative activity is put on hold ahead of European parliamentary election this June.”
At this time, it appears we will get a heavily watered-down CS3D – if we get the CS3D at all. Negotiations have already limited the scope of the law significantly, with headcount and turnover thresholds being doubled to only include companies with 1000 employees and an annual turnover of 300 million Euros. If the CS3D does not pass before EU elections in June, it is unlikely to be picked up by the subsequent legislature as the Union’s government is expected to shift substantially to the right. Should the CS3D fail, member states may take matters into their own hands and pass supply chain due diligence legislation similar to that of Germany’s Supply Chain Due Diligence Act, leading to a patchwork of supply chain legislation across the EU.
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