24 Feb 2022, 12:59
Sören Amelang

NGOs call EU supply chain proposal insufficient, businesses fear overburdening

Clean Energy Wire

Environmental NGOs have criticised EU Commission proposals for sustainable supply chains as insufficient, whereas businesses called them excessive. "The climate obligation included is full of uncertainties - for example, it remains unclear whether companies will have to include the entire value chain in their plans," said NGO Germanwatch corporate responsibility expert Cornelia Heydenreich. "For a truly effective EU supply chain law, Germany must push for improvements in liability and climate protection." NGO Environmental Action Germany (DUH) said the proposal "falls far short of expectations in terms of climate protection and scope of application”. DUH criticised that the proposals only require companies to submit a climate protection plan, but did n0t contain clear sanctions in case of non-compliance. It added the proposal would only apply to less than one percent of all companies, and only to already established trade relations. "The EU Commission missed a historic chance."

In contrast, German industry association BDI said the proposal risked to "overburden" companies. "Given the magnitude of the challenge, it is wrong to shift the task of protecting human rights and the environment onto companies in this way," said the lobby group's Wolfgang Niedermark. He added the scope of application across the entire value chain - including downstream stages - was unrealistic. "Mandatory legal requirements must be limited to direct suppliers in order to be implementable in daily practice." Niedermark said a law must take into account that especially small and medium-sized companies have less influence on supply chains because of limited resources and market power.

The EU commission tabled its proposal for a directive on "corporate sustainability due diligence" to foster sustainable and responsible corporate behaviour, and "to anchor human rights and environmental considerations in companies’ operations and corporate governance. The new rules will ensure that businesses address adverse impacts of their actions, including in their value chains inside and outside Europe.” Germany's own supply chain law is set to enter into effect in 2023.

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