In a letter sent by Finance Minister Christian Lindner and Justice Minister Marco Buschmann, the German government planned to “abstain.” Credit: Getty Images

The EU vote on the Corporate Sustainability Due Diligence Directive (CSDDD) takes place next week (9 January) but a Reuters report cites a letter sent by Finance Minister Christian Lindner and Justice Minister Marco Buschmann, which reveals the German government plans to “abstain”, though Just Style was unable to verify this at time of press.

Based on the voting mechanisms at the EU level this de facto works as a ‘no’ vote.

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Just last December, the EU Parliament and council negotiators informally agreed on new legislation for corporate sustainability due diligence that will apply to all big companies as well as smaller companies deemed to be in high-risk sectors, such as the textile and apparel sector.

The agreed draft law requires formal approval by the Legal Affairs Committee and the European Parliament as a whole, as well as by the Council (EU governments) before it can become enforced.

Media outlet Euractiv, quoting Linder and Buschmann, says they are against the introduction of the CSDDD on concerns of the potential “administrative burden” it may entail compared to the German Supply Chain Due Diligence Act, which does not contain a liability regime.

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Germany’s Act on Corporate Due Diligence Obligations in Supply Chains (LkSG) came into force from January 2023, imposing accountability on fashion brands in Germany, or operating within the country for their environmental and social responsibilities.

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At that time Mauro Scalia, director of sustainable businesses at Euratex, told Just Style exclusively that companies face enormous bureaucratic burdens and reporting obligations as the law comes into force on 1 January 2023.

Scalia noted: “From 2023, companies that employ at least 3,000 workers and thus fall within the scope of the Act will have to prepare an annual report on the fulfilment of due diligence obligations in the previous business year. In addition, significantly more companies are actually affected by the law than intended from the defined scope of the law. In the current dramatic situation of global distortions, business-threatening high energy prices and disrupted supply chains, the medium-sized companies, in particular, will face great challenges and burdens.”

Euractiv noted that when the law was initially passed by EU countries in 2022, Germany submitted a diplomatic note calling for a so-called “safe harbour” clause which would make it easier for companies to reduce legal liability.

Germany’s abstention likely means that the final adoption of the law now hinges on the position of Italy.

In June 2023, Clean Clothes Campaign (CCC), an alliance of apparel labour unions and non-governmental organisations, pointed out the European Parliament stopped short of embedding value chain mapping and transparency as part of the due diligence obligation.

The alliance added it was high time for the EU to bring change in the way business is done, given that millions of garment workers across the world see their rights for freedom of association, occupational health and safety and living wages attacked every day.