What companies need to know now

On November 13, the European Parliament took a decisive step toward reforming EU supply chain legislation. By a clear majority, MEPs voted to relax reporting obligations and due diligence requirements in order to reduce bureaucracy for companies.

What was decided?

The planned directive on corporate due diligence was originally intended to require comprehensive audits along global supply chains. Now, a simplification will follow:

• Reduced reporting requirements to avoid duplication with the Corporate Sustainability Reporting Directive (CSRD).
• Limited liability risks for companies, especially SMEs.
• Narrower scope of application: This mainly affects large companies with more than 5,000 employees and high turnover.

Why the change?

The business community had warned of excessive bureaucracy. Companies felt overwhelmed by the original requirements and feared competitive disadvantages. Parliament is now responding with a change of course to strengthen Europe’s competitiveness while not completely losing sight of sustainability goals.

What does this mean for companies?

Large companies must continue to analyze and report risks—but in a simplified form. Smaller businesses will be relieved of some of the burden. Digital solutions are intended to help implement the remaining obligations efficiently.

What’s next for the EU Supply Chain Act?

• Trilogue negotiations: Following the vote in the EU Parliament, talks with EU member states will take place to finalize the directive. The goal is to complete this process by the end of 2025.
• Entry into force: Implementation has been postponed – the first obligations are expected to apply from July 2028.

You can find the EU Parliament’s announcement here.

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