VDMA Says New EU Rules on Supply Chain Checking Are Unrealistic

 An interesting viewpoint from the VDMA, an association for German machinery and equipment manufacturers. Also valid for insurance brokers, IT suppliers, claims and rebuild specialists too. How can smaller businesses check every single supplier in the chain for human rights, ESG activities and Net Zero compliance and yet still get some real work done each day? Here’s the word;

Ahead of the vote on the European legislation on corporate sustainable due diligence in the European Parliament, Thilo Brodtmann, Executive Director of the VDMA, comments:

“Members of the European Parliament should not approve the current versions of European due diligence legislation. It is time to pull the emergency brake. The European Commission’s proposal for a corporate sustainable due diligence directive and the European Parliament’s draft report (Wolter´s Report) still overshoot the mark and do a disservice to the global protection of human rights.

The European engineering industry is already committed to human rights and environmental protection in supply chains. We support the European Union’s aims to consolidate social and environmental standards in business relations. However, the requirements go much too far, especially for medium-sized companies, and will not improve the protection of human rights in the world. Small and medium sized enterprises (SMEs) cannot control all stages of their supply chains in distant countries because they lack the market power to obtain the necessary information. They certainly cannot influence their customers.

The enormous bureaucratic effort is also overburdening the medium-sized, internationally networked companies that are typical of the engineering sector. They will be forced to err on the side of caution and withdraw from certain regions. They should therefore be excluded from the scope and the employee threshold should be aligned with the German Due Diligence Act.

In addition, European due diligence legislation should be limited to what companies can actually control: their own operations, their subsidiaries and their direct suppliers. A ‘white list’ of countries we can trust in principle, and a ‘black list’ of untrustworthy companies, would at least provide legal certainty and significantly reduce red tape.”