When the federal government agreed on its supply chain law last year, EU Justice Commissioner Didier Reynders commented benevolently in an interview with the FAZ.

At the same time, however, he made it clear that the EU Commission would not be satisfied with the supply chain law it had announced.

Henrik Kafsack

Business correspondent in Brussels.

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But the legislative proposal itself has been a long time coming.

It was repeatedly postponed, also because Reynders was too ambitious for some in Brussels to hold European companies responsible for monitoring environmental, climate and human rights violations in third countries.

But now the time has come: in the middle of the week, Reynders will present a proposal against which the German law actually comes across as downright modest.

Reynders wants to oblige all but the smallest companies to check their entire supply chain for suppliers violating environmental, climate and human rights.

What's more, under certain circumstances, they should also be liable for violations by companies involved in their supply chain.

This emerges from a current draft of the law, which is available to the FAZ.

The draft also mentions the 1.5 degree target of the Paris climate agreement as a reference.

In addition, Reynders wants to link the bonus payments for managers directly to the monitoring of the supply chain.

The text could still change before the final presentation, the commission said on Monday.

But the core shouldn't be touched anymore.

Supply chain surveillance has put Europeans' growing unease about conditions in the production of clothing and other goods on the agenda.

The debates about the forced labor of the Uyghurs in Chinese labor camps, the conditions in textile factories in Pakistan and Bangladesh or the pollution of the environment caused by the Shell oil company in Nigeria have all contributed to this.

In addition to Germany, France and Great Britain have also reacted with supply chain laws, while other countries are still planning their own laws.

Specifically, Reynders wants to make all companies with more than 500 employees and annual sales of more than 150 million euros responsible.

For comparison: The threshold of the German law is 3000 employees and will only drop to 1000 employees in 2024.

In addition, the requirements should also apply to companies with more than 250 employees and a turnover of more than 40 million euros if they generate more than half of their turnover in a “risk sector”.

This includes the textile industry, but also the food industry and the extraction of raw materials.

According to estimates by the EU Commission, a total of 13,000 companies in the EU and 4,000 non-EU companies are affected.

Contrary to what Reynders originally planned, companies with fewer than 250 employees are not affected.

More transparency, but also more bureaucracy

The Commission's proposal not only differs from German law in terms of the structure of the companies concerned, but also in most other respects.

The German law only applies to direct suppliers.

There is no provision for liability for violations by suppliers, nor for linking the supervision of the supply chain to the managers' bonus payments.

Climate damage is also not directly recorded.

Criticism and praise for the initiative comes from the EU Parliament, which, like the member states, must approve the law so that it can come into force.

"The proposal exceeds our worst fears," said CDU MP Markus Pieper.

That means even more reporting obligations for medium-sized companies.

"That, combined with the fact that companies should be held accountable for potential damages through civil liability, is simply disproportionate and will sever global supply chains to the detriment of poor regions."

Anna Cavazzini from the Greens, on the other hand, emphasizes: "With this law, we have the lever in our hands to curb human rights violations in the global supply chains." This is also an opportunity for companies, because the law will create a level playing field and clear rules throughout Europe - In addition, more and more consumers are now paying attention to whether, for example, the cocoa beans were picked using child labour.