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.
EU member states also still have to officially approve the project, but this is considered a formality.
In mid-March, a sufficient majority of EU member states demonstrated in a meeting of EU representatives in Brussels their intention to back the supply-chain law.
This meant that Germany, which had abstained at the urging of the FDP, was outvoted. An abstention in this committee has the same effect as a "no" vote.
The German government has repeatedly failed to find a common position on important EU laws and therefore has to abstain from decisive votes.
Normally, once negotiators for EU member states and the parliament have agreed a compromise, the steps on its final passage into law are little more than formalities.
But the European Supply Chain Act has had a much bumpier ride than usual. The initial compromise with parliamentary negotiators was brokered in December by Spain, acting on behalf of all EU member states.
But that compromise failed to win adequate support among senior diplomats, with particular concerns coming from Germany and Italy.
That obstacle forced Belgium - which in January took over from Spain as negotiator-in-chief - to persuade parliamentary negotiators to tweak the agreement.
The new compromise raises the threshold at which companies will fall under the new rules: from 500 employees and annual revenue of €150 million in the old compromise, to 1,000 employees and €450 million in the new agreement.
The law will come into effect gradually over a five-year period, affecting larger companies earlier, starting with those that have more than 5,000 employees and €1.5 billion in annual revenue.