The European Union endorsed plans to scale back its current ethical supply chain rules. File Photo by Patrick Seeger/EPA-EFE
The European Union is set to amend its current ethical supply chain rules after its ambassadors endorsed a simplification bill from the Council of the EU.
“Today we delivered on our promise to simplify EU laws,” said EU Minister of Poland Adam Szlapka in a press release Monday. “We are taking a decisive step towards our common goal to create a more favorable business environment to help our companies grow, innovate, and create quality jobs.”
The bill would impact current environmental laws with the intention of shrinking the regulatory pressures on businesses in order to juice up the EU’s economy.
Two such green rules are the EU’s Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive. These currently insist that all the companies that do business in the EU and have at least 1,000 employees report their environmental effects. The bill would increase the employee threshold that forces a company to comply up to 5,000 employees.
Currently, the CSRD and CSDDD also require companies that make at least approximately $522 million in net turnover to monitor their supply chains for environmental and human rights violations. The bill would raise that starting bar to about $1.7 billion.
The release said the regulations were being loosened based on the concept that larger companies “are best equipped to absorb the costs and burdens of due diligence processes.”
The bill would also limit the obligation required for companies to adopt a transition plan to deal with climate change. It would give the EU Council authority to advise companies on how to create and execute such plans.
The Council could then give companies up to two years to implement those plans in order to “further reduce burdens and provide companies with sufficient time for adequate preparations.”
If adopted, less than 1,000 companies would be affected by the CSRD, down from the nearly 50,000 companies that currently must comply.
However, should Omnibus pass, there could be legal challenges. The nonprofit ClientEarth Europe environmental organization posted to X Tuesday that “The Omnibus is fueling legal uncertainty and might breach the law too.”
“A new legal analysis warns of the risk of future legal challenges if the Omnibus is passed into law,” the post continued. “The agreement reached by the EU Council last night heightens these risks by further undermining the [CSDDD].
