Germany and Italy are objecting to the EU’s supply chain ESG laws, meaning that any decision will now need to be postponed.

The corporate sustainability due diligence directive (CSDDD) would obligate companies with over 500 employees and a net worldwide turnover over €150m to validate their own operations, those of their subsidiaries, and those carried out by their business partners and ensure that they do not use forced labour or create environmental damage. It would cover upstream business partners of the company and partially the downstream activities, such as distribution or recycling.

The two countries have abstained on the vote meaning that under the EU’s qualified majority voting system the law has been stalled. At a time when German industry is suffering a sharp decline, the extra burden on companies us being seen with some sections of Germany as too much at the wrong time.

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