Although small and medium-sized enterprises are formally excluded from the scope of the directive, they must also be able to manage the indirect effects
Vienna (OTS) – The European Parliament and member states reached a preliminary agreement on an EU supply chain law (Corporate Sustainability Due Diligence Directive, CSDDD) in the early hours of Thursday. The Austrian economy is committed to sustainable, responsible and future-proof business and supports the initiative's intentions to improve international human rights and environmental protection through a coherent legal framework.
“Europe has always operated in a sustainable and socially responsible way. It would be essential for these standards to be applied globally. At the same time, this must not become a boomerang for Europe as a business location”, says Rosemarie Schön, head of the legal policy department at the Austrian Economic Chamber (WKÖ). “With the EU supply chain law, affected companies – directly and indirectly – will face a huge additional bureaucratic effort.”
Small and medium-sized enterprises are formally excluded: the scope of the CSDDD now affects “very large” EU companies with more than 500 employees and 150 million annual sales, as well as EU companies in certain predefined “risk areas” with more than 250 employees and worldwide net sales of more than 40 million euros. Companies from third countries with a turnover of more than 300 million euros are included in the EU.
However, SMEs would be indirectly affected if companies passed on their obligations along the value chain (“trickle-down effect”). There is a risk that due diligence obligations are transferred to contractual partners (often SMEs) under civil law. “Small companies should not be pressured as suppliers through contractual clauses. Bureaucracy and documentation requirements are particularly difficult for SMEs to navigate. The administrative effort and costs of administrative regulations must be kept as low as possible during implementation,” emphasizes Schön.
It is positive to note that, with regard to the responsibility of executive directors, the current legal situation is rightly considered sufficient. Furthermore, a risk-based approach has been accepted: this allows companies to assess the likelihood of misconduct along their supply chains and set appropriate priorities for control areas. “Our main objective must be to keep the EU a sustainable, future-proof and business-friendly place,” concluded Schön. (PWK463/HSP)
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