Last week, the European Parliament set its official negotiating position on the reform of EU rules for sustainability reporting and due diligence. According to the Parliament’s announcement, 382 MEPs voted in favour, 249 against, and 13 abstained.
Under the resolution, the current requirements for companies are to be significantly streamlined:
- Reporting obligations would in future apply only to companies with more than 1,750 employees and annual net sales of more than €450 million.
- Due diligence obligations – i.e. the duty to assess risks to people and the environment in the supply chain – would apply only to very large companies with 5,000 employees and €1.5 billion in sales.
- A mandatory transition or climate plan is no longer envisaged.
- Industry-specific reports would be voluntary.
- Small suppliers should be shielded from additional information requirements.
The Parliament justifies this by saying the rules should be “simplified and focused on truly relevant companies.”
Less control in the supply chain
According to the parliamentary decision, companies would no longer have to audit their suppliers throughout the entire supply chain. Instead, a risk-based approach would apply, allowing firms to rely on existing data and request additional information only in exceptional cases.
Liability rules would also be weakened: violations would be sanctioned at the national level, rather than EU-wide.
Affected parties would still have the right to compensation – but the rules should be made “clearer and less burdensome”, according to the Parliament.
New EU portal to reduce bureaucracy
As a relief measure, the European Commission is planning a new digital portal that will provide companies with:
- templates
- guidelines
- and all EU reporting obligations
free of charge and in one place.
According to the Parliament, the portal is intended to complement the existing European Single Access Point and provide companies with “uniform access to all relevant requirements.”
Jörgen Warborn (EPP, Sweden), rapporteur of the Legal Affairs Committee, said according to the press release:
“Today’s vote shows that Europe can be both sustainable and competitive. We simplify rules, reduce costs, and provide companies with the clarity they need to grow, invest, and create well-paying jobs.”
What happens next?
Negotiations between the Parliament and the member states will start on 18 November. According to the European Parliament, the aim is to finalise the legislation by the end of 2025.
What does this mean for Germany?
Germany has had its own supply chain law since 2023, with significantly stricter thresholds:
- from 1,000 employees, and
- comprehensive due diligence across the entire supply chain.
If the European directive is adopted in its now-weakened form, it would apply to far fewer companies than the German law.
However, under EU rules, there is a “non-regression clause”: the implementation of the EU directive must not fundamentally lower existing national standards.
For Germany, this means:
- the federal government cannot simply scale back its own law to the EU level, and
- it must nonetheless ensure that both sets of rules remain compatible.
For the German logistics and transport industry, which frequently operates as a supplier, the realignment could lead to fewer requirements – but only if Germany uses the flexibility allowed under the EU directive.
