EU Supply Chain Directive: Danger for medium-sized businesses and jobs!

EU Supply Chain Directive: Danger for medium-sized businesses and jobs!

The Senate of Economic Affairs sharply criticizes the EU Supply Chain Directive, which has been in force since July 25, 2024. This directive, known as the Corporate Sustainability Due Diligence Directive (CSDDD), aims to ensure human rights, raise environmental standards and prevent child labor. Loud Leadersnet warns the business organization that the directive poses a threat to middle classes, prosperity and jobs.

The CSDDD requires companies with over 1,000 employees or an annual turnover of more than 450 million euros to monitor their global supply chain for human rights and environmental risks. In practice, however, this could impose an unacceptable burden on small and medium-sized enterprises (SMEs). Hans Harrer, chairman of the Senate of Economic Affairs, describes the directive as a “bureaucratic monster” that is overwhelming medium-sized businesses.

Criticism of bureaucracy and feasibility

The requirements associated with the directive are complex. Companies must implement a risk-based system to identify and prevent human rights violations and environmental damage. This includes, among other things, risk analyses, prevention measures and the establishment of complaint procedures. However, small companies often do not have the necessary human or financial resources to meet these requirements CSR in Germany.

While the directive applies to companies based in the EU, it also covers companies from third countries if they generate relevant sales in the EU. This regulation could lead to a massive exodus of European companies from difficult markets, which could benefit authoritarian actors and unethical companies.

Economic impact and demands

The Senate of Economic Affairs criticizes the lack of transparency and control options, which pose risks for sustainable European companies. “Instead of strengthening standards, the directive could cause economic damage,” explains Harrer. The organization sees the danger that the new regulations could represent a step backwards in terms of women's rights, child labor and ecological standards.

In its statement, the Senate calls for a complete withdrawal of the supply chain directive and a reduction in bureaucracy. Further demands include the creation of investment incentives for SMEs and the expansion of fair trade agreements. National over-fulfillment of EU requirements should also be avoided.

In summary, while the CSDDD aims at social justice and environmental sustainability, it faces major implementation challenges - particularly for medium-sized and small businesses.