A majority of EU lawmakers in the European Parliament approved a supply-chain law on Wednesday designed to protect human rights.
The European Supply Chain Act holds large companies accountable if they profit from child labour, forced labour and other human-rights violations in their supply chains outside the European Union.
EU, non-EU and parent companies with turnover of more than €450 million ($481 million) are subject to the regulation and will be liable for damages as well fines for non-compliance.
For example, if large fashion companies have their clothes sewn by children in Asia, the victims of such exploitation will in future be able to claim compensation under the new legislation.
The EU legislature approved the supply chain law with 374 votes in favour, 235 against with 19 abstentions.
The legislation caused controversy in the German coalition, pitting the centre-left Social Democrats and the Greens against the liberal Free Democrats (FDP), a minority partner in the government, who feared the legislation would unduly burden the economy.
The FDP feared that the law would drive companies out of Europe.