The European Union (EU) is taking a strong stance against human rights violations and environmental damage in global supply chains. The European Parliament passed a landmark law yesterday, making large companies legally liable for such abuses throughout their operations.
This law will significantly impact Bangladesh, a major supplier of garments to the EU. From 2027 onwards, European clothing brands could face hefty fines if their Bangladeshi factories violate worker rights or harm the environment.
The law, titled “Corporate Sustainability Due Diligence Directive,” requires companies to identify and prevent human rights abuses like child labor and unsafe working conditions. It also mandates action against environmental destruction like pollution and deforestation.
The legislation applies to both EU and non-EU companies exceeding a certain turnover threshold within the EU. Implementation will be phased, with larger companies being held accountable first.
Fines for violations can be severe, reaching up to 5% of a company’s global turnover.
The law specifically identifies sectors like textiles and garment production as “high impact” areas.
While the EU steps up enforcement, questions remain about Bangladesh’s preparedness. A 2023 study revealed child labor persists in yarn and thread manufacturing, despite its near-elimination in garment factories themselves. Additionally, many factories lack proper wastewater treatment facilities, raising environmental concerns.
Meeting the new EU standards will require significant investment from Bangladeshi manufacturers, particularly in areas like renewable energy. Industry leaders acknowledge the need for adjustments but express varying degrees of confidence in their readiness.
The EU law marks a turning point in global business practices. By holding brands accountable for their entire supply chains, the EU aims to eliminate exploitation and promote a more sustainable future. The success of this initiative will depend on cooperation between companies, governments, and worker organizations.