Hundreds of companies, campaign groups and lawyers have signed a letter in support of new EU legislation compelling companies to undertake human rights and sustainability due diligence, following threats that the German government would abstain from a key vote.

It emerged this week that Germany could withhold its support for the new law—the Corporate Sustainability Due Diligence Directive (CSDDD)—as last-gasp concerns grew over the burden it would place on companies.

An abstention could not on its own derail the CSDDD, but it could persuade other states to withdraw their support ahead of a scheduled vote in the European Council on Friday.

The campaigners’ letter calls on EU member state governments to “recognise” the “pivotal importance” of the due diligence directive and vote in favour.

‘Ensure businesses contribute positively’

“It is time for decisive action to ensure businesses contribute positively to our society and planet and align business and human rights for good,” the letter says.

The CSDDD mandates companies to define and act on due diligence policies, which check and address any “adverse impacts” in their supply chains on the environment and human rights.

Boards must integrate the due diligence policies into strategy; identify and mitigate “adverse impacts”; engage with stakeholders; and monitor due diligence policies.

Failure to comply could result in fines of up to 5% of worldwide turnover, while the law also provides civil liability route for damages claims.

The rules apply from 2027 to companies with 1,000 employees or more and a worldwide turnover of €300m (£256m).

Critical thinking

Late last week, Euractive, a European news service, reported that German ministers had said they would abstain. Previously, Germany has been concerned about the level of liabilities companies could face if they fell foul of the law.

There is speculation that if Germany goes ahead with an abstention, Italy could follow suit. Euractive reports that Sweden, Finland, Czechia and Estonia have also expressed concern in the past.

The CSDDD is one of two wide-ranging directives aimed improving sustainability performance. The other, the Corporate Sustainability Reporting Directive (CSRD) came into law last year and will be implemented by large listed companies from this year, and large unlisted companies from 2026.

The CSDDD has always been controversial with campaigners frequently pushing for stiffer measures, while companies have consistently expressed concern about the cost and scope of implementation. One worry was how “adverse impact” might be defined. There were also concerns about impacts beyond the direct control of large corporates.

The EU has been pushing hard for sustainability policy as politics has polarised around the issue. Friday’s vote could be a nailbiter.