German government may abstain on CSDDD vote, reports suggest

The German government may be planning to abstain on an upcoming vote on the EU’s draft corporate sustainability due diligence directive (CSDDD), according to media reports. Reuters said it has seen a letter by two top German ministers that suggests the German government would oppose the draft European law.

The letter, sent by Finance Minister Christian Lindner and Justice Minister Marco Buschmann and seen by Reuters, said the government planned to abstain on the issue. Reuters said that while Germany alone cannot block the law’s approval, its abstention would be seen as a substantial sign of disapproval which other countries unhappy with the law could follow.

It added that both ministers are members of Germany’s pro-business Free Democrats party (FDP) and do not represent the views of the whole ruling coalition. Reuters said the letter said there are significant liability risks because the EU’s draft CSDDD is based on a very broad definition of the supply chain.

Reuters noted that Chancellor Olaf Scholz acknowledged on Thursday that there were differences in the cabinet on the issue, telling a press conference in Brussels that, while there were discussions, “progress is a snail”.

The German employers’ association Gesamtmetall said that in its current form, the directive would go far beyond the German regulations and make legally secure foreign trade virtually impossible.

“The companies, boards of directors, management and supervisory boards should be liable for compliance with due diligence obligations throughout the entire value chain. This is a total challenge for companies,” said Gesamtmetall president Dr Stefan Wolf. “Ultimately, even more companies would be forced to withdraw from individual countries in the future than after the introduction of the German Supply Chain Due Diligence Act. This damages the resilience of our supply chains and thus the competitiveness of our companies – and at the same time the countries affected. This hasn’t helped anyone.”

He added: “Experiences so far with the German Supply Chain Due Diligence Act show that it has triggered a tsunami of bureaucracy, with pages of confirmations and declarations being filled out all the way to the local butcher shop. Only consultants and lawyers benefit from this. And in the German regulation at least civil liability is excluded.”