Are Europe's climate targets threatened by amendments to the Supply Chain Act?
The often controversial EU Supply Chain Act, which has been positively assessed by environmental and human rights organizations, was adopted by the EU Parliament yesterday, 3.4.2025, in its form as amended in February. In doing so, the EU bowed to great pressure from business circles. The amendment includes the postponement of the law to 2028 and the exemption of 80 percent of all companies from the sustainability reporting obligation. Following the postponement of the CO2 fleet targets in the automotive industry, this is a further step towards softening the European climate targets - and more have been announced.
The original aim of the law was to hold companies with more than 1,000 employees and an annual turnover of more than 450 million euros accountable for the negative impact of their production on people and nature. And that along their entire supply chain. As a first step, large companies with more than 5,000 employees and an annual global turnover of more than 1.5 billion euros were to implement the law by July 2027.
Now, in an "emergency procedure", the EU has postponed this by one year to mid-2028 in order to increase competitiveness and reduce bureaucracy - according to the explanation for the softening. Furthermore, only direct suppliers are involved and not the entire supply chain. Furthermore, there are to be simpler sustainability requirements.
In addition, 80 percent of all companies will be exempt from the sustainability reporting obligation (CSRD) and reporting in accordance with CSRD will now only focus on those that could have the greatest impact on people and the environment. The date of introduction has also been postponed by two years.
The EU's civil liability provisions, which in the original Supply Chain Act had stipulated that victims of UNtrafficking could sue and be compensated, are also to be abolished while at the same time safeguarding the rights of victims.
SMEs benefit from supply chain law
The "Human Rights Need Laws" campaign , an association of employee representatives and NGOs, published a compact fact check on the supply chain law the day before the EU Parliament's decision.
According to Südwind, the fact check makes it clear, among other things, that the EU Supply Chain Act brings advantages for small and medium-sized enterprises because it creates the same rules for everyone. Companies (mostly SMEs) that already act sustainably and pay attention to fair production conditions are currently at an economic disadvantage. The Supply Chain Act means that large corporations will also have to follow suit in future. SMEs themselves are only indirectly affected by the EU Supply Chain Act. Support is provided for those who are themselves active as producers in the supply chain of large companies.
U-turn leads to problems for many companies
While some praise the amendments as reducing bureaucracy and strengthening the competitiveness of European companies, others describe them as a step backwards in terms of climate targets. Many companies have embarked on the path to climate neutrality in recent years. Investments have been made. Steered their business model in this grandchild-friendly direction. New branches of industry, new business models, new businesses and companies have emerged. These are the ones who are now suffering from the European U-turn, let's call it that. Instead of generating a competitive advantage, they are now losing customers, investments and sales. Meanwhile, the companies that were previously on the brakes are benefiting from the current situation.
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