EU Backs Law Requiring Companies To Perform Mandatory Human Rights Check

The European Union Parliament has approved a draft law requiring large companies to perform background checks on whether suppliers are damaging the environment or using child labor. 

The Parliament voted 366 in favor and 255 against strengthening the compliance requirement after a last-minute effort to reject or pass a watered-down version of the law failed. 

“With this vote, EU policymakers are recognizing that current voluntary codes of conduct are not producing the seismic shift we need to ensure sustainable corporate business practices,” Richard Gardiner, head of EU policy at World Benchmarking Alliance, told Reuters.

The Corporate Sustainability Due Diligence Directive (CSDDD) is one of several EU “green deal” plans facing opposition from center-right parties. They are all aimed at requiring large corporations to publish plans on how they plan to cut emissions and transition to a net-zero economy. 

Performing CSDDD checks on suppliers would mean businesses will have to take mitigating action when they uncover abuses else they will be subject to sanctions. 

As a next step, EU states will begin negotiating the deal’s final terms later in June 2023. The negotiations will likely target disagreements over the scope of the rules and when they will come into effect. One key area of dispute between the EU Parliament and the EU states is whether or not to include financial services, with Parliament in favor of it and the EU against it.