Big companies in the European Union are moving closer to addressing their impact on global warming and their use of forced labor in their supply chains. Recently, the European Parliament Legal Affairs Committee passed a new directive known as the Corporate Sustainability Due Diligence Directive (CSDDD), which aims to hold firms accountable for the negative effects of their activities on human rights and the environment.
Under this directive, companies will be required to create a transition plan to align their business models with the global warming limit set by the Paris Agreement. This plan should include specific climate change targets and actions to achieve them. Non-compliance could result in fines of up to 5% of a company’s net global turnover.
Despite the positive steps taken towards this legislation, there have been challenges, particularly from Italy and Germany, which led to a watered-down version of the directive being voted on. The threshold for companies falling under the scope of the directive has been increased, reducing the number of companies affected.
Although there have been criticisms about the weakened nature of the directive, supporters like Jasmine O’Connor, CEO of Anti-Slavery International, are hopeful that it will still make a significant impact. Lead MEP Lara Wolters emphasized the importance of adopting this legislation to hold corporations accountable and ensure clarity on their responsibilities.
If the bill is enacted, it will take three years to come into effect to allow member states to integrate it into their legal frameworks. Overall, this legislation is seen as a crucial step towards achieving the targets set by the Paris Agreement and holding corporations responsible for their environmental actions.
