EU passes supply chain audit law after prolonged delays

Facebook
Twitter
LinkedIn
Reddit
Email
The final version of the directive will apply to EU-based companies with 1,000 employees or more and an annual turnover of at least €450 million (US$490 million). Image: Flickr

The Council of the EU has approved a law that will require some EU companies to audit their supply chains to avoid environmental damage and human rights abuses.

The Corporate Sustainability Due Diligence Directive (CSDDD) was approved by the Council on Friday (15th March) after weeks of delay and renegotiation. Companies will have to identify, prevent and mitigate “adverse human rights and environmental impacts” in their own, their subsidiaries’ and their supplies’ operations.

This article requires Premium SubscriptionBasic (FREE) Subscription

Try Premium for just $1

  • Full premium access for the first month at only $1
  • Converts to an annual rate after 30 days unless cancelled
  • Cancel anytime during the trial period

Premium Benefits

  • Expert industry analysis and interviews
  • Digital access to PV Tech Power journal
  • Exclusive event discounts

Or get the full Premium subscription right away

Or continue reading this article for free

The final version of the directive will apply to EU-based companies with 1,000 employees or more and annual turnover of at least €450 million (US$490 million). This threshold is higher than the original proposal, which would have applied to companies with 500 employees and a net worldwide turnover of €150 million (US$163 million). This first version of the CSDDD was rejected in late February by a number of EU member states led by Germany’s Free Democratic Party (FDP).

Following the Forced Labour Ban

The European solar PV industry has turned its attention to its supply chain in recent months, due to growing concerns about the transparency of these arrangements, and the CSDDD could be significant for the sector.

Head of supply chains at representative trade body SolarPower Europe, Anett Ludwig, said: “Companies need legislative certainty to manage their compliance requirements effectively and efficiently, and through these latest political decisions, the solar sector now has a path forward to reinforce our supply chain sustainability in line with law.

“To ensure legislative coherence – and the clearest path possible – we ask that the CSDDD is referenced within the final text and implementing guidelines of the Forced Labour Ban regulation.”

The EU passed its Forced Labour Ban earlier this month (5th March), which will see member states – or the European Commission if a third country is involved – investigate the supply chains of companies operating in the EU where exposure to forced labour practices is suspected.

The upstream portions of the solar supply chain – predominantly polysilicon production – are operating under the shadow of alleged forced labour practices in Xinjiang province, China, where much of the world’s polysilicon is produced and its raw materials are mined. Both the CSDDD and the Forced Labour Ban are awaiting final approval by the European Parliament.

Supply transparency

In the council’s approval text, section 15 says that the directive “should not require companies to guarantee, in all circumstances, that adverse impacts will never occur or that they will be stopped.”

It goes on to say that in some cases – such as “where the adverse impact results from state intervention” – companies may be unable to ensure that their supplies are compliant and should not be asked to do so. Instead, the directive should operate on “obligations of means”, whereby companies should take “appropriate measures” to address human rights or environmental issues but “the circumstances of the specific case” should be taken into account.

For solar PV, “state intervention” in the supply chain has been a sticking point. At a conference last month, members of the European Solar Manufacturing Council (ESMC), European Parliament and human rights campaign groups called for a “reversal of the burden of proof” for solar supply chains, whereby companies have to prove their own compliance with import laws, rather than governing bodies investigating them.

Speakers at the conference said that this model – which was adopted by the US’ Uyghur Forced Labor Prevention Act (UFLPA) – is the only “valid” way to ensure that solar supply chains are free from human rights abuse, because of the inability for external companies to see “on-the-ground” operations in Xinjang province, where “state-sponsored” forced labour is allegedy perpetrated.

This month’s EU Forced Labour Ban does not propose to “reverse the burden of proof,” and will instead rely on investigations made by the European Commission.  

The EU recently announced measures to support domestic solar manufacturing in what Kadri Simson, EU the commissioner for energy, said was a “very fragile situation” for the sector. The bloc still the bloc relies overwhelmingly on imports, however, the majority of which come from China.

2 December 2025
Málaga, Spain
Understanding PV module supply to the European market in 2026. PV ModuleTech Europe 2025 is a two-day conference that tackles these challenges directly, with an agenda that addresses all aspects of module supplier selection; product availability, technology offerings, traceability of supply-chain, factory auditing, module testing and reliability, and company bankability.
10 March 2026
Frankfurt, Germany
The conference will gather the key stakeholders from PV manufacturing, equipment/materials, policy-making and strategy, capital equipment investment and all interested downstream channels and third-party entities. The goal is simple: to map out PV manufacturing out to 2030 and beyond.

Read Next

September 16, 2025
Sunotec has launched Sunotec Nordic to spearhead solar and hybrid renewable project development across the Nordic region.
September 16, 2025
Chinese polysilicon producer GCL-Tech has entered into a strategic financing agreement with Infini Capital, a globally renowned investment institution backed by a Middle Eastern sovereign wealth fund.
September 16, 2025
IB Solar is investing INR30 billion (US$340 million) in a 4GW TOPCon solar cell and module manufacturing plant in Jewar, Uttar Pradesh.
September 16, 2025
Two of the major European solar trade associations, the European Solar Manufacturing Council (ESMC) and SolarPower Europe (SPE), have called for EU policymakers to take measures supporting European solar manufacturing.
September 15, 2025
Sunrun has priced a securitisation of leases and power purchase agreements, taking its non-recourse debt capital raised in Q3 above US$1.5 billion. 
September 15, 2025
Norwegian energy firm Statkraft has agreed to divest a portion of its renewable energy portfolio to Serentica Renewables.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
September 16, 2025
Athens, Greece
Solar Media Events
September 30, 2025
Seattle, USA
Solar Media Events
October 1, 2025
London, UK
Solar Media Events
October 2, 2025
London,UK
Solar Media Events
October 7, 2025
Manila, Philippines