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Coffee cultivation: Should large companies in the EU be liable throughout their supply chain?

Photo: medialensking / Pond5 Images b / IMAGO

Environmental and social associations sharply criticize the Federal Government's announced abstention from the EU vote on the European Supply Chain Act. "The German abstention is a fatal signal to all people worldwide who are affected by exploitation, modern slavery, expulsion and destruction of jungles," explained Armin Paasch from the aid organization Misereor.

Federal Labor Minister Hubertus Heil (SPD) had previously announced that Germany would abstain from voting on the planned EU supply chain law. Heil said that he had looked for a compromise until the end and accused the FDP of an "ideologically motivated blockade" in the matter.

The European supply chain law is intended to hold large companies accountable if they profit from child or forced labor outside the EU. However, a German abstention could cause the entire set of regulations to fail because the necessary majority in Brussels is in jeopardy.

In contrast to the SPD and the Greens, Finance Minister Christian Lindner and Justice Minister Marco Buschmann (both FDP) had long signaled resistance because they feared disadvantages for the German economy. Because of this attitude, the FDP was criticized within the traffic light coalition. (Read here why many companies are further ahead than politicians on this issue.)

WWF: German companies disadvantaged

The environmental organization WWF called on Chancellor Olaf Scholz (SPD) to use his directive authority so that Germany could agree. This is also in the interests of companies, because “by preventing it, the FDP is putting German companies at a disadvantage that are already implementing the German supply chain law,” explained Heike Vesper from the WWF. Proponents of the EU law argue, among other things, that companies in this country must adhere to the German supply chain law, while their European competitors have not yet had to comply with such requirements.

“If other countries join in abstaining or vote ‘no’ and overturn the law, the door to child labor and exploitation would still be open,” said Tim Zahn, supply chain expert at Oxfam.

Lobby groups also criticized Heil's announcement. “Germany is discrediting itself as a political partner in the EU by torpedoing a project that has been negotiated for years at the last minute,” explained Michelle Trimborn from the Supply Chain Act Initiative. Lutz Weische from Germanwatch said that the FDP would show "a frightening level of irresponsibility in European politics shortly before the European elections." He accused Chancellor Scholz of “letting the smallest coalition partner dictate his agenda.”

However, the FDP received a lot of praise from business. From the chemical to the textile industry, companies fear excessive bureaucracy and legal uncertainty because of the supply chain law.