Recital (37)

Directive (EU) 2024/1760 imposes wide-ranging due diligence obligations on certain companies. Because of that, its scope is limited to particularly large companies. Nevertheless, the report entitled The future of European competitiveness identified the due diligence framework as a major source of regulatory burden, concluding in this respect that there was a need to better consider the size of companies affected by regulation. Furthermore, Directive (EU) 2024/1760 can best achieve its objectives as regards the very largest companies, which have the greatest influence over their value chains, the greatest impact on human rights and the environment, and the greatest resources to implement due diligence diligently. For all of those reasons, and in line with the crucial objective of simplification, the scope of Directive (EU) 2024/1760 should be reduced. The turnover threshold of EUR 450000000 should be raised to EUR 1500000000, and the threshold of 1000 employees should be raised to 5000 employees. Accordingly, the thresholds regarding companies that have entered into franchising or licensing agreements should be raised to EUR 75000000 with regard to royalties and EUR 275000000 with regard to turnover.