European Union’s Supply Chain Regulation Faces Pressure from German Businesses
Nine top industry associations in Germany have issued a joint statement, reported by Politico, calling for a relaxation of the EU’s supply chain regulation. The associations argue that the obligation for companies to monitor their suppliers should only apply to direct suppliers outside the EU, rather than imposing new due diligence requirements on businesses within the EU’s single market, which has high standards.
The associations claim it is not justifiable to introduce new due diligence requirements in the internal market with its high standards. Limiting the scope to suppliers from third countries could also prevent the bureaucratic burden from falling on small and medium-sized enterprises in the EU.
“The economy expects pragmatic laws that are reasonably easy to fulfill” the associations wrote, adding that the European Union must finally meet this requirement.
If the regulation is not scrapped entirely, the associations demand a pressing simplification of the due diligence requirements. They also mention the reporting requirements for sustainability (CSRD), the rules on carbon border adjustment mechanism (CBAM) and the regulations against deforestation (EUDR).
The associations suggest reducing the sustainability reporting to a “clearly understandable, legally secure and manageable with a reasonable effort core.” For all regulations, they propose a common threshold for company size, from which they would apply, with a suggestion of at least 3,000 employees and a minimum annual turnover of 450 million euros.
The EU’s supply chain regulation (CSDDD) requires companies to verify the compliance of their suppliers with social and environmental standards, as well as human rights. The regulation has already been adopted, but not yet in force. The European Commission itself has made proposals to simplify the regulation, reducing bureaucracy, costs and risks for businesses. The discussions about the regulation are entering a decisive phase in Brussels this week, with the industry associations’ demands likely to influence the outcome. The initiative is backed by the German Confederation of Chemical Industry, the German Confederation of Wholesale, Foreign Trade and Services, the Federation of the German Service Industry, the Mittelstandsverbund, Gesamtmetall, the Stiftung Familienunternehmen und Politik, the Association of the Chemical Industry, the Association of the Electrical and Digital Industry and the Association of German Mechanical and Plant Engineering.