France Urges EU to Suspend New Supply Chain Regulations Citing Business Burdens
On January 24, France called on the European Union to indefinitely suspend new regulations concerning environmental and human rights standards in supply chains, arguing that these rules impose excessive burdens on businesses. This request coincides with the EU's commitment to simplify regulations for firms that feel overwhelmed by red tape amid increasing competition from both the United States and China.
Benjamin Haddad, France's European Affairs Minister, announced the appeal via X (formerly Twitter), emphasizing that French companies urgently require simplification rather than additional administrative obstacles. He also urged a review of the Corporate Sustainability Reporting Directive (CSRD), which has faced criticism from European business groups.
The urgency of the request comes as the EU has been grappling with issues such as low productivity, slow growth, high energy costs, and weak investments, all contributing to a sense of economic stagnation that Brussels is keen to address. EU Chief Ursula von der Leyen underscored the need for regulatory simplification at a recent global summit in Davos, stating that too many firms hesitate to invest in Europe due to unnecessary bureaucratic hurdles. She announced plans for a comprehensive simplification effort that includes the very due diligence rules France seeks to suspend.
The Corporate Sustainability Due Diligence Directive (CSDDD), which mandates that large companies identify and mitigate adverse human rights and environmental impacts in their supply chains globally, has emerged as particularly contentious. While France is pushing for a delay, nine aid and environmental organizations, including Oxfam France and Bloom, condemned the move as irresponsible, warning that it threatens essential legislation designed to combat climate and social issues. They argue that such a stance is incompatible with the EU's climate objectives.
The CSRD, another regulatory framework under scrutiny, requires large companies to disclose information on their climate impacts and emissions, as well as the steps they are taking to address them. The French government described the regulations as 'hell for companies,' resonating with a growing sentiment among executives and industry leaders who deem the requirements excessively burdensome.
In light of this situation, a lobby group representing Germany's major businesses has expressed its opposition to both the CSDDD and CSRD, arguing that European firms should not face disproportionate standards compared to their overseas counterparts. This perspective has been echoed by BusinessEurope, the EU's main business lobby, which called for immediate action from the EU to signal its commitment to reducing regulatory pressures on firms.
As the EU navigates these disputes, it faces significant challenges in balancing the need for sustainable business practices with the imperative of nurturing an economically competitive environment for its member states.
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