Top German and French politicians would like to bid good riddance to two European directives forming what is commonly known as the supply chain law. The European Parliament’s rapporteur on the easing of the existing rules says that would be a step too far.
MEP Jörgen Warborn (EPP/SWE), rapporteur for the proposed easing of the Corporate Sustainability Due Diligence Directive and the Corporate Sustainability Reporting Directive wants to exempt more companies from the latter’s requirements than the European Commission does.
Jörgen Warborn, the lead negotiator for the sustainability omnibus package, is pushing for significantly greater regulatory relief for businesses than the European Commission has proposed. His proposal aims to eliminate climate transition plans from the Corporate Sustainability Due Diligence Directive. He also wants to raise the threshold for companies subject to the Corporate Sustainability Reporting Directive to those with at least 3,000 employees.
Dangerous patchwork
That said, Mr Warborn does not wish to scrap the EU supply chain law entirely. He argues that a full repeal would not provide the economic relief he deems necessary and would instead lead to a patchwork of national supply chain laws, forcing companies to comply with a variety of different standards across EU member states.
“If you go down the line of deleting (the directive) then I think European businesses have to be prepared for the fact that you could have due diligence legislation in different member states,” Warborn said. “I’m not totally convinced that would be simplifying things for businesses.”
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I’m not totally convinced (deleting the directive) would be simplifying things for businesses MEP Jörgen Warborn
The Corporate Sustainability Due Diligence Directive, or CSDDD, is an EU directive that mandates large companies to conduct mandatory due diligence to identify, prevent, and mitigate adverse human rights and environmental risks and impacts in their operations and their supply chains. This means they must take steps to address issues like forced labor, child labor, pollution, and biodiversity loss. The first von der Leyen Commission proposed it in February 2022, and it came into force in December of the following year.
The Corporate Sustainability Reporting Directive, or CSRD, almost a full year older, is an EU regulation that mandates large and listed companies to disclose information on their sustainability risks and impacts, integrating them with their financial reporting. It replaced the Non-Financial Reporting Directive (NFRD) when it came into force in January 2023. The legislation introduces a broader range of reporting requirements, including mandatory disclosures of specific sustainability indicators and reporting on sustainability policies, risks, and targets.
Key threshold raised
The Commission had announced in late February that it aimed to raise the CSDDD threshold to 1,000 employees—up from the current 250. French President Emmanuel Macron and German Chancellor Friedrich Merz are calling for the directive to be scrapped altogether. Mr Warborn, however, is not prepared to go that far.
Negotiations on the sustainability omnibus bill are expected to conclude by the end of the year, with the European Parliament likely to vote on the package in October.