The directive initially proposed by the Commission on 23 February 2022 would require member states to introduce legislation making companies responsible for violations of human rights and environmental standards along its entire value chain...

However, multiple EU diplomats told EURACTIV that a coalition of member states, including France, Italy, Spain, and Portugal, are trying to prevent this in a last-minute push to narrow the scope of the directive to the supply chain of a company.

“We believe that the focus should be on the upstream and not on the downstream [of the value chain],” an EU member state diplomat told EURACTIV, arguing that due diligence of the supply chain was already ambitious...

A diplomat of another EU member state told EURACTIV that the last-minute push led by France “is getting to a point where all that would remain would be a value chain in name only.”

As several EU diplomats confirmed to EURACTIV, the push is resisted by Germany, Denmark, Finland, Netherlands and Luxembourg.

“Companies would be completely off the hook for the harms their products create,” one source familiar with the negotiations told EURACTIV regarding the consequence of ditching the value chain approach for a supply chain approach.

For example, pesticide producers would not be held accountable if their products were used in a way that was especially harmful to the environment or to public health. Or producers of digital surveillance tools could not be made responsible if their tools were used for illegal surveillance operations, such as Pegasus or Predator.

The supply chain approach would also benefit financial institutions that do not want to be held liable for what their invested money might be put to use for...