The European Commission has announced that it will present an ambitious EU-wide legislative proposal on sustainable corporate governance before the end of 2021. It can count on the support of the Council of the European Union: The 27 EU member states spoke out in favour of European supply chain legislation in December 2020 in the Employment, Social Policy, Health and Consumer Affairs Council presided over by Federal Minister of Labour Heil. This was the first time that all member states committed to EU-wide binding rules.
In January 2021, The Committee on Legal Affairs of the European Parliament also came out in favour of a concrete legislative initiative in an own-initiative report. In March, the report was adopted by the European Parliament plenary session with 504 voting for and 79 against (there were 112 abstentions). According to the decision of the Parliament, in future companies should identify in their supply chain, then address and remedy them. This goes for what is done along the entire value chain, including both direct and indirect business relationships and investment chains. The provisions called for are not only about respect for human rights, but also the environment and responsible corporate governance. The scope of the legislation is defined as broadly as possible: all large companies bound by the laws of a member state or established in the European Union are specifically meant. In addition to listed companies, the rules will also apply to high-risk SMEs. Civil liability is an essential part of the Parliament's initiative to enforce due diligence. The proposals of the report are to be incorporated into the Commission’s planned legislation next.
Federal Minister Hubertus Heil:
I very much welcome the European Parliament's initiative for ambitious EU supply chain rules. The EP's latest decision is completely in line with the “Council Conclusions on Human Rights and Decent Work in Global Supply Chains” adopted by all 27 EU member states in the Council of the European Union on 1 December 2020 during Germany’s presidency. It is good for Germany to lead the way with its own national rules. It is encouraging that on some points the EP's plans go even further than the recent national compromise. This is a boost for Commissioner Didier Reynders, who has my full support.
The agreement on German legislation adds significant momentum to the European initiatives. In addition, Germany’s presidency marked the beginning of Germany, Portugal and Slovenia’s trio presidency. Portugal and Slovenia have also committed themselves to the joint programme to bolster corporate responsibility at EU level. The EU now has the opportunity to be the community of states that takes the lead in ensuring that globalisation is fair.