EU reduction in bureaucracy: New rules for supply chains and data

The supply chain law is actually intended to hold companies accountable for human rights violations and environmental pollution in their production. It was decided in spring 2024, but is not yet effective and has already been postponed once. Business associations have long considered the burden of the Supply Chain Act to be too high. Under their pressure, numerous companies are exempted from the regulations. The law should apply to companies with more than 5,000 employees and a global annual turnover of at least 1.5 billion euros. Previously, the threshold was 1,000 employees and 450 million euros in sales.

The affected companies should also no longer have to monitor the details of their entire supply chain. Companies should primarily investigate where they themselves suspect a high risk of violations. They should also rely on information that is “reasonably available” from their suppliers, i.e. not requiring in-depth research.

The reform also removes EU-wide liability for violations of the law. This means that compensation for victims of human rights violations and environmental pollution will in future depend on the courts in the different EU states. Fines for violations should amount to a maximum of three percent of a company’s global annual turnover.

Chief negotiator

Today, Wednesday, the focus in Brussels is on further relief for small and medium-sized businesses, which will be voted on at committee level. These are documentation obligations based on the General Data Protection Regulation. “So far, companies with 250 or more employees have had to document with great precision which data they process and how. This means a huge administrative effort,” says Lukas Mandl.

The EU MP (ÖVP) is one of the European Parliament’s three chief negotiators on the fourth regulatory reduction package. “The commission had suggested that in the future this should apply to 750 or more employees. But that would still hit many companies hard and deter them from their core business,” said Mandl. “We have achieved through negotiations in the European Parliament that the rules will now only apply to 1,000 employees or more.”

There will also be increases in the key figures for sales and total assets, according to Mandl’s office. This is about 200 million euros in annual sales instead of 150 as proposed by the Commission; and by 172 million euros in total assets instead of 129 million as proposed by the Commission.