New EU timetable

Delay for implementation of supply chain law

The EU Commission wants to strengthen Europe as a business location by reducing bureaucracy.

(Bild: PATRICK T. FALLON/AFP)

The EU Commission wants to make Europe more competitive. To this end, it wants to soften and dismantle countless laws and regulations. This includes the Supply Chain Act, the implementation of which is to be postponed.

On Wednesday, the Commission launched its first "omnibus" proposals, which provide for a postponement of the Supply Chain Act by one year and the exemption of 80% of EU companies from sustainability reporting. 

The EU Supply Chain Act is intended to hold large companies accountable if they profit from child or forced labor outside the EU, for example. Penalties could include being named and shamed or fines of up to five percent of the company's global net turnover.

Implementation to be postponed
From July 26, 2027, the rules will actually apply to European companies with more than 5,000 employees and more than 1.5 billion euros in annual global turnover; these thresholds will fall by 2029. All smaller companies are exempt from the accountability obligations.

On Wednesday, the Commission proposed giving companies more time to prepare for compliance with the new requirements. The deadline for the application of the due diligence obligations for the largest companies is to be postponed by one year (until July 26, 2028), while the adoption of the guidelines is to be brought forward by one year (to July 2026).

There are also to be simpler sustainability requirements "so that the companies concerned avoid unnecessary complexity and costs", according to the Brussels authority. The EU's civil liability conditions are to be abolished while at the same time safeguarding the rights of victims.

Relief for SMEs
The Commission also proposes exempting around 80 percent of companies from sustainability reporting (CSRD) and concentrating the reporting obligations on the largest companies that could have the greatest impact on people and the environment.

Companies that are currently required to report from 2026 or 2027 are only to be required to report two years later (by 2028). The reporting obligations under the EU taxonomy will also only apply to the largest companies. The Taxonomy Regulation provides an EU framework for the classification of "green" activities or investments.

Overall, around a quarter less bureaucracy should reduce the burden on companies. Reporting obligations for small and medium-sized enterprises are to be reduced by 35 percent.

Mixed reactions to the announcement
Austrian reactions to the "Omnibus" plans announced by the EU Commission to reduce bureaucracy, the "Clean Industrial Deal" and the "Affordable Energy Plan" have been mixed. While the Austrian Trade Union Confederation (ÖGB) and the Chamber of Labor (AK), for example, saw the plans for the Supply Chain Act as a "watering down", the Austrian Federal Economic Chamber (WKÖ) welcomed the overall package as a step in the right direction. Criticism came from environmental organizations.