**Brussels**: The European Commission has introduced a new package aimed at improving business competitiveness in the EU, including significant changes to the Supply Chain Directive that delay due diligence obligations and reduce administrative burdens for large companies and SMEs, forecasted to save billions annually.
In Brussels on Wednesday, the European Commission introduced a comprehensive package of measures aimed at bolstering the competitiveness of businesses within the European Union. A significant aspect of this initiative involves the simplification of numerous EU regulations, including the Supply Chain Directive, commonly referred to as CSDDD.
One of the key changes in the proposed regulations is the postponement of the due diligence obligations linked to the Supply Chain Directive, which is now scheduled to be implemented at the end of July 2028. Notably, large companies will no longer be mandated to verify their supply chains down to indirect business partners, a move that is expected to alleviate the administrative burden on businesses. Additionally, provisions are being made to lessen the impact on small and medium-sized enterprises (SMEs) by restricting the amount of information they are required to provide for tracking supply chains.
The European Commission also anticipates a significant reduction in the number of companies affected by these reporting obligations. Adjustments to the Corporate Sustainability Reporting Directive (CSRD) will limit its application to companies employing over a thousand personnel, with revenues exceeding 50 million euros or total assets surpassing 25 million euros. With these changes, the Commission estimates that the number of companies required to comply with such reporting will decrease by approximately 80 per cent.
Financially, the Commission asserts that these proposed reforms could lead to an annual saving of approximately 6.3 billion euros in administrative costs, a figure deemed conservative. In conjunction with this, the Commission forecasts that these adjustments may spur additional investments amounting to 50 billion euros.
With the proposal now in the hands of EU legislators, namely the European Parliament and the Council of the European Union, the Commission has called for prompt prioritisation of the initiative. EU Commission President Ursula von der Leyen expressed optimism regarding the proposals, stating they would simplify operations for European businesses and hinted at further relief measures. “The world is changing before our eyes,” remarked EU Trade Commissioner Valdis Dombrovskis, emphasising the necessity for a robust EU economy to uphold its values.
The response from various stakeholders has varied. Helena Melnikov, CEO of the German Chamber of Industry and Commerce, expressed a measured outlook, terming the initial package for reducing bureaucracy as “a glimmer of hope for our economy, but nothing more.” In contrast, the Green faction within the European Parliament criticised von der Leyen’s approach, labelling it a potential threat to human rights, climate protection, and biodiversity.
The Supply Chain Directive was initially enacted in 2024, obligating member states to translate its provisions into national legislation. Meanwhile, Germany had already enacted its “Supply Chain Due Diligence Act” in 2021, which came into effect in 2023, potentially signalling a precedent for its implementation at the national level within EU member states.
Source: Noah Wire Services
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