In a setback for multinational regulation in the European Union, Germany, France, and Italy have blocked a law aimed at enforcing human rights and mitigating the negative impact of large corporations in third countries. The due diligence directive, which included fines for abuses such as child labor, labor exploitation, and environmental damage, failed to garner the necessary majority for ratification.
This rejection, led by Germany and supported by France and Italy, has thwarted efforts to hold large companies accountable for their actions and those of their supply chain in terms of sustainability and human rights. The regulation sought to impose obligations to combat labor exploitation and pollution, among other aspects, with fines of up to 5% of companies’ turnover. Affected companies would be those with more than 500 employees and a worldwide turnover exceeding 150 million euros, or with more than 250 employees and a turnover exceeding 40 million euros in certain sectors. Each country would have to designate a supervisory authority to ensure compliance with the rules.
The main argument behind the blockade, led by German liberals, is that the new directive would imply an additional bureaucratic burden for trade. This decision has caused disappointment among progressive forces in the European Parliament and social organizations, who lament the lack of action to protect people and the planet.
In the words of Heidi Hautala, Vice President of the Greens, this blockade represents a “sad day for human rights, the environment, and the competitiveness of European businesses,” criticizing member states for breaking the agreement at the last moment.
