The Dual Challenge of Cost Efficiency and Effectiveness in EU Supply Chain Regulation

The EU's Corporate Sustainable Due Diligence Directive aims to internalize human-rights and environmental compliance in global value chains by holding large firms accountable for supply chain breaches in third countries. In response to criticism over compliance costs, the European Commission has amended the regulation through the "Omnibus Package", which limits company liability to direct suppliers and delays the initial application. While this reduces bureaucratic costs, it undermines the regulation's effectiveness, as potential breaches rather occur in lower tiers. High due diligence costs and opaque supply chains further complicate the issue. Adopting systemic solutions for supply chain regulation, rather than non-standardised due diligence procedures, would more effectively address the trade-off between regulatory efficiency and effectiveness.