News / EU cuts burdensome red tape for SMEs - but customers may demand transparency

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France and German calls to totally abolish EU sustainability directives may have fallen short, but a push to reduce legislative red tape seems to have worked, as the European Commission announced a significant watering down of regulations. However, forwarders are concerned.

All 27 member states approved major amendments proposed by the Omnibus Simplification Bill to the Corporate and Sustainability Due Diligence Directive (CSDD) and the Corporate Sustainability Reporting Directive (CSRD), among other instruments.

Poland’s EU minister Adam Szłapka said: “Today we delivered on our promise to simplify EU laws. We are taking a decisive step towards our common goal to create a more favourable business environment to help our companies grow, innovate, and create quality jobs.”

The CSDD requires companies to monitor global supply chains for human rights abuses and sustainability violations, while the CSRD requires companies to disclose information about their sustainability performance, covering environmental, social, and governance (ESG) factors.

Going further than proposals lodged in February, the changes brought on in this latest bill has lifted the reporting threshold to companies with 5,000-plus employees turning over €1.5bn or more, five times the present employee count and 10 times the original count.

In a statement, the EC said: “This proposal aims at simplifying the directives on corporate sustainability reporting (CSRD) and due diligence (CSDD) by reducing the reporting burden and limiting the trickle-down effect of obligations on smaller companies.

“In the Council’s view, such largest companies can have the biggest influence on their value chain and are best equipped to absorb the costs and burdens of due diligence processes,” noting that SMEs had also been removed from the CSRD directive.

Forwarders who have spoken with The Loadstar have provided mixed responses to the changes, with a number critical of the calls from French president Emmanuel Macron and German chancellor Friedrich Merz to scrap the policies completely.

Project manager with responsibility for sustainability at Group7, Daniel Jocher, had a much more positive response to the legislation, believing that it offers the chance to bring a sense of unity to global supply chains in an otherwise fractious moment.

“It’s important to recognise it isn’t just about environmental protection or box-ticking, it’s a broader, values-driven framework seeking to embed respect for human rights, environmental sustainability, and responsible governance,” Mr Jocher told The Loadstar.

“Seen from that perspective, it offers an opportunity – not just an obligation – to reinforce our commitments, enhance resilience, and build more sustainable and transparent value chains. Ultimately, the goal should be to shape a balanced and practical implementation.”

However, another SME forwarder noted concerns that with consumer sentiment increasingly driven by sustainable practices, not being party to the directive may put them at a competitive disadvantage to multinationals.

Those comments echoed views expressed over the past decade that government legislation was being driven to benefit larger firms, resulting in significant M&A activity that has seen multinationals hoovering up the competition.

Director of consulting at operational risk software company, Sphera, Stefan Premer, however, believes the EU’s decision is not a regression as far as sustainability goes, instead arguing that it presents opportunities for realignment.

Mr Premer said: “This is a good moment for companies across value chains to take stock. It’s a chance to reassess which parts of their reporting infrastructure are genuinely adding business value and where they can simplify without compromising quality.

“For companies that now sit just outside the updated thresholds, the direct regulatory pressure might be easing but the reality is that customers, investors and partners are still going to demand transparency around sustainability.”