The European Union has failed to approve the Corporate Sustainability Due Diligence directive (CSDDD) with an industry expert warning that without the directive, fashion brands and factories will face an "ever-growing patchwork of local rules and regulations".

In the wake of the CSDDD being blocked by European Union countries, Fair Wear Foundation’s executive director, Alexander Kohnstamm, told Just Style exclusively all involved in making global supply chains work for consumers, workers and businesses “want this legislation”.

After two years of negotiations, and for the second time, the EU parliament did not qualify for a majority vote for the directive to start in 2027. 

CSDDD would require companies to actively eliminate negative practices such as child labour, slavery, pollution, or deforestation.

Through this directive, companies would be obligated to integrate due diligence into their policies and monitor the effectiveness of their efforts.

As long as the directive is not implemented, Fair Wear’s executive director believes brands and factories will have to deal with a range of local rules and regulations, which he states: is “in nobody’s interest”. 

Whilst EU brands continue to invest in their ability to do due diligence, which is a justifiable move according to Kohnstamm, he notes that the legislation already exists in Germany and other major markets. He continues to explain that the due diligence approach to CSR is “beneficial” for other aspects of business operations and “impactful for human rights and the environment.”

Despite the result, Kohnstamm remains hopeful of a solution being found sooner or later.

He says: “We’re confident a solution will be found sooner or later.” 

CSDDD EU parliament rapporteur Lara Wolters said the failure of member states to approve this agreement is an “outrage” and she views it as “flagrant disregard” for the EU parliament as a co-legislator. 

She expressed huge disappointment in the “irresponsible attitude” that she witnessed from the Free Democratic Party (FDP) in Germany.

She continued: “This law should be a global landmark to hold companies to account and incentivise responsible business conduct and companies are already preparing to implement it.” 

Wolters pointed out that every effort has been made to reach a majority and there is significant pressure from business and civil society to do so. 

However, she claimed that member states are listening to a minority of extreme business voices who have so far rejected every proposal and continue to do so. 

She believes there is still time for member states to “get their act together and stop blocking this law but that time is rapidly running out” given the EU elections are in June. 

Concerns surfaced earlier this month that the German government would abstain from the CSDDD vote, which would lead to delays.

On 8 February the Ethical Trading Initiative (ETI) said that while Germany had already demonstrated leadership through the adoption of its own national Due Diligence law in line with the United Nations Guiding Principles (UNGPs), it was putting the wider effort of the EU at risk by abstaining at this late stage, adding it was “very serious and difficult to understand”.

German finance minister Christian Lindner previously posted on X (formerly Twitter) that the CSDDD would put a “massive burden on companies without secure progress for human rights and the environment”. He added: “Germany is obviously anything but alone with its concerns.”

Belgium said it would assess if it was possible to address EU members’ concerns, in consultation with the parliament and attempt to set up a new agreement.

Wolters confirmed the council is still convening and considering bringing the directive back into parliament in the next few days.

She believes the council needs “clarity” on where they stand and whether or not they are serious about this law as all she sees right now is “chaos and irresponsibility” and has urged the member states to “get their house in order.”

 By Just Style