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2022/0051(COD) Corporate Sustainability Due Diligence
Next event: Contribution 2023/07/06 more...

Progress: Awaiting Parliament's position in 1st reading

RoleCommitteeRapporteurShadows
Lead JURI WOLTERS Lara (icon: S&D S&D) VOSS Axel (icon: EPP EPP), VÁZQUEZ LÁZARA Adrián (icon: Renew Renew), HAUTALA Heidi (icon: Verts/ALE Verts/ALE), LEBRETON Gilles (icon: ID ID), BUXADÉ VILLALBA Jorge (icon: ECR ECR), AUBRY Manon (icon: GUE/NGL GUE/NGL)
Committee Opinion AFET GLUCKSMANN Raphaël (icon: S&D S&D) Heidi HAUTALA (icon: Verts/ALE Verts/ALE), Karol KARSKI (icon: ECR ECR), Marisa MATIAS (icon: GUE/NGL GUE/NGL), Ivan ŠTEFANEC (icon: PPE PPE), Katalin CSEH (icon: RE RE)
Committee Opinion DEVE MAJORINO Pierfrancesco (icon: S&D S&D) Michèle RIVASI (icon: Verts/ALE Verts/ALE), María Soraya RODRÍGUEZ RAMOS (icon: RE RE), Manon AUBRY (icon: GUE/NGL GUE/NGL), Beata KEMPA (icon: ECR ECR), Frances FITZGERALD (icon: PPE PPE), Antoni COMÍN I OLIVERES (icon: NA NA)
Committee Opinion INTA ANDREWS Barry (icon: Renew Renew) Sergio BERLATO (icon: ECR ECR), Helmut SCHOLZ (icon: GUE/NGL GUE/NGL), Anna CAVAZZINI (icon: Verts/ALE Verts/ALE), Marek BELKA (icon: S&D S&D), Angelika WINZIG (icon: PPE PPE)
Committee Opinion CONT
Committee Opinion ECON REPASI René (icon: S&D S&D) Manon AUBRY (icon: GUE/NGL GUE/NGL), Gunnar BECK (icon: ID ID), Jessica POLFJÄRD (icon: PPE PPE), Claude GRUFFAT (icon: Verts/ALE Verts/ALE), Dorien ROOKMAKER (icon: ECR ECR), Erik POULSEN (icon: RE RE)
Committee Opinion EMPL RAFAELA Samira (icon: Renew Renew) Evelyn REGNER (icon: S&D S&D), Leila CHAIBI (icon: GUE/NGL GUE/NGL), Miriam LEXMANN (icon: PPE PPE), Margarita DE LA PISA CARRIÓN (icon: ECR ECR), Sara MATTHIEU (icon: Verts/ALE Verts/ALE)
Committee Opinion ENVI WÖLKEN Tiemo (icon: S&D S&D) Pascal CANFIN (icon: RE RE), Sirpa PIETIKÄINEN (icon: PPE PPE), Alexandr VONDRA (icon: ECR ECR), Mick WALLACE (icon: GUE/NGL GUE/NGL), Marie TOUSSAINT (icon: Verts/ALE Verts/ALE), Aurélia BEIGNEUX (icon: ID ID)
Committee Opinion ITRE DLABAJOVÁ Martina (icon: Renew Renew) Angelika NIEBLER (icon: PPE PPE), Patrizia TOIA (icon: S&D S&D), Damien CARÊME (icon: Verts/ALE Verts/ALE), Paolo BORCHIA (icon: ID ID), Marina MESURE (icon: GUE/NGL GUE/NGL)
Committee Opinion IMCO CLUNE Deirdre (icon: EPP EPP) Dita CHARANZOVÁ (icon: RE RE), Anne-Sophie PELLETIER (icon: GUE/NGL GUE/NGL), Geert BOURGEOIS (icon: ECR ECR), René REPASI (icon: S&D S&D), Malte GALLÉE (icon: Verts/ALE Verts/ALE)
Committee Opinion CULT
Committee Opinion LIBE
Committee Opinion AFCO
Committee Opinion FEMM
Lead committee dossier:
Legal Basis:
RoP 57, TFEU 050-p1, TFEU 114-p1

Events

2023/07/06
   FR_ASSEMBLY - Contribution
Documents
2023/06/06
   ECB - European Central Bank: opinion, guideline, report
2023/06/01
   EP - Results of vote in Parliament
2023/06/01
   EP - Decision by Parliament, 1st reading
Details

The European Parliament adopted by 366 votes to 225, with 38 abstentions, amendments to the proposal for a Directive of the European Parliament and of the Council on corporate sustainability due diligence and amending Directive (EU) 2019/1937.

The matter was referred back to the committee responsible for inter-institutional negotiations.

Companies’ obligations

Parliament specified that the directive should lay down rules on companies' obligations regarding actual and potential negative impacts on human rights and the environment that they have caused, contributed to or are directly involved in, with regard to their own activities, and those of their subsidiaries.

Companies would be required to identify and, where appropriate, prevent, bring to an end or mitigate the negative impact of their activities on human rights and the environment, such as child labour, slavery, labour exploitation, pollution, environmental degradation and loss of biodiversity. They should also monitor and assess the impact of their business partners, not only suppliers, but also sales, distribution, transport, storage, waste management and other areas.

Scope of application

The new rules will apply to EU-based companies, regardless of their sector, including financial services, with more than 250 employees and a worldwide turnover over EUR 40 million as well as to parent companies with over 500 employees and a worldwide turnover of more than EUR 150 million. Non-EU companies with a turnover higher than EUR 150 million, if at least EUR 40 million was generated in the EU, will also be included.

Integration of due diligence

Companies covered by the Directive should:

- integrate due diligence into their corporate policies, identify and, where necessary, prioritise, prevent, mitigate, remedy, eliminate and minimise potential and actual adverse impacts on human rights, the environment and good governance;

- establish or participate in a mechanism for the notification and out-of-court handling of complaints ,

- monitor and verify the effectiveness of actions taken in accordance with the requirements set out in the Directive,

- communicate publicly on their due diligence and consult relevant stakeholders throughout this process.

Member States should ensure that parent undertakings can take action to help ensure that their subsidiaries falling within the scope of the Directive comply with their obligations.

Companies should apply a due diligence policy that is proportionate and commensurate to the degree of severity and the likelihood of the adverse impact and commensurate to the size, resources and capacities of the company, taking into account the circumstances of the specific case, including the nature of the adverse impact, characteristics of the economic sector, the nature of the company’s specific activities, products, services, the specific business relationship.

In conflict-affected and high-risk regions, companies should uphold their obligations under international humanitarian law and demonstrate heightened, conflict-sensitive due diligence in their operations and business relationships.

Prevention of potential negative impacts

Companies would be required to take the following steps, as appropriate:

- consider establishing contractual arrangements with partners with whom the company has a business relationship, obliging them to comply with the company's code of conduct and, where appropriate, a prevention action plan;

- take necessary modifications, improvements to, withdrawals of or investments in, the company’s own operations, such as into management, production or other operational processes, facilities, products and product traceability, projects, services and skills;

- adapt business models and strategies, including purchasing practices, including those which contribute to living wages and incomes for their suppliers, in order to prevent potential adverse impacts, and develop and use purchase policies that do not encourage potential adverse impacts on human rights or the environment;

- take appropriate measures to ensure that the composition, design and commercialisation of a product or service is in line with Union law and does not lead to adverse impacts, be it individual or collective. In this regard, particular attention shall be paid to potential adverse impact on children.

Mitigating actual negative impacts

Where a company has caused or contributed to an actual adverse impact, it should take steps to remedy or contribute to the remedy of that adverse impact and any harm it has caused to people or the environment. Remedial measures would aim to restore the affected individuals, groups, communities and/or the environment to a situation equivalent to, or as close as possible to, that which existed prior to the adverse impact.

Exchanges with stakeholders

The new rules would also require companies to engage in dialogue with those affected by their actions, including human rights and environmental defenders. Companies would also be required to regularly monitor the effectiveness of their due diligence policies. To facilitate investor access, information on a company's due diligence policy should also be available on the European Single Access Point (ESAP).

Employees and their representatives should be informed by their company of its due diligence policy and its implementation.

Guidelines

To provide support to companies or to Member State authorities, the Commission, in consultation with Member States, the European cross-industry and sectoral social partners and other relevant stakeholders, should issue clear and easily understandable guidelines, including general and sector- specific guidance, in order to facilitate compliance in a practical manner. Each Member State should designate one or more national helpdesks for corporate sustainability due diligence.

Combating climate change

Companies should implement a transition plan to limit global warming to 1.5°C. Companies with more than 1 000 employees on average should have an effective policy in place to ensure that part of any variable remuneration for directors is linked to the company’s transition plan.

Sanctions

Non-compliant companies will be liable for damages and can be sanctioned by national supervisory authorities. Sanctions include measures such as “naming and shaming”, taking a company’s goods off the market, or fines of at least 5% of the net worldwide turnover . Non-EU companies that fail to comply with the rules will be banned from public procurement in the EU

Documents
2023/06/01
   EP - Matter referred back to the committee responsible
2023/05/31
   EP - Debate in Parliament
2023/05/08
   EP - Committee report tabled for plenary, 1st reading/single reading
Documents
2023/05/08
   EP - Committee report tabled for plenary, 1st reading
Documents
2023/04/25
   EP - Vote in committee, 1st reading
2023/03/09
   EP - Committee opinion
Documents
2023/03/06
   EP - Committee opinion
Documents
2023/03/03
   EP - Committee opinion
Documents
2023/02/10
   EP - Committee opinion
Documents
2023/02/01
   EP - Committee opinion
Documents
2023/01/31
   EP - Committee opinion
Documents
2023/01/26
   EP - Committee opinion
Documents
2023/01/25
   EP - Committee opinion
Documents
2022/12/08
   EP - Amendments tabled in committee
Documents
2022/12/08
   EP - Amendments tabled in committee
Documents
2022/12/07
   EP - Amendments tabled in committee
Documents
2022/12/07
   EP - Amendments tabled in committee
Documents
2022/12/06
   EP - Amendments tabled in committee
Documents
2022/11/07
   EP - Committee draft report
Documents
2022/09/15
   EP - Referral to associated committees announced in Parliament
2022/09/05
   EP - RAFAELA Samira (Renew) appointed as rapporteur in EMPL
2022/07/18
   FR_SENATE - Contribution
Documents
2022/07/14
   DE_BUNDESRAT - Contribution
Documents
2022/07/14
   EP - ANDREWS Barry (Renew) appointed as rapporteur in INTA
2022/07/13
   ESC - Economic and Social Committee: opinion, report
Documents
2022/05/25
   CZ_SENATE - Contribution
Documents
2022/05/11
   EP - GLUCKSMANN Raphaël (S&D) appointed as rapporteur in AFET
2022/05/10
   EP - WÖLKEN Tiemo (S&D) appointed as rapporteur in ENVI
2022/04/21
   EP - CLUNE Deirdre (EPP) appointed as rapporteur in IMCO
2022/04/19
   EP - DLABAJOVÁ Martina (Renew) appointed as rapporteur in ITRE
2022/04/04
   EP - Committee referral announced in Parliament, 1st reading
2022/03/22
   EP - MAJORINO Pierfrancesco (S&D) appointed as rapporteur in DEVE
2022/03/03
   EP - REPASI René (S&D) appointed as rapporteur in ECON
2022/02/28
   EP - WOLTERS Lara (S&D) appointed as rapporteur in JURI
2022/02/24
   EC - Document attached to the procedure
2022/02/24
   EC - Document attached to the procedure
2022/02/24
   EC - Document attached to the procedure
2022/02/24
   EC - Document attached to the procedure
2022/02/24
   EC - Document attached to the procedure
2022/02/23
   EC - Legislative proposal published
Details

PURPOSE: to lay down an EU legal framework on sustainable corporate governance, including cross-sector corporate due diligence along global value chains.

PROPOSED ACT: Directive of the European Parliament and of the Council.

ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with the Council.

BACKGROUND: EU companies operate in complex surroundings and, especially large ones, rely on global value chains. Given the significant number of their suppliers in the Union and in third countries and the overall complexity of value chains, EU companies, including the large ones, may encounter difficulties to identify and mitigate risks in their value chains linked to respect of human rights or environmental impacts.

Identifying these adverse impacts in value chains will become easier if more companies exercise due diligence and thus more data is available on human rights and environmental adverse impacts.

A number of Member States have already introduced national rules on due diligence and some companies have taken measures at their own initiative. However, there is need for a larger scale improvement that is difficult to achieve with voluntary action.

CONTENT: the proposed Directive will set out a horizontal framework to foster the contribution of businesses operating in the single market to the respect of the human rights and environment in their own operations and through their value chains, by identifying, preventing, mitigating and accounting for their adverse human rights, and environmental impacts, and having adequate governance, management systems and measures in place to this end.

Subject matter

The proposal lays down rules on obligations for companies regarding actual and potential human rights adverse impacts and environmental adverse impacts, with respect to their own operations, the operations of their subsidiaries, and the value chain operations carried out by entities with whom the company has an established business relationship and on liability for violations of the obligations mentioned above.

In order to comply with the corporate due diligence duty, companies need to:

- integrate due diligence into policies;

- identify actual or potential adverse human rights and environmental impacts;

- prevent or mitigate potential impacts;

- bring to an end or minimise actual impacts;

- establish and maintain a complaints procedure;

- monitor the effectiveness of the due diligence policy and measures;

- and publicly communicate on due diligence.

Scope

The proposed Directive shall apply to companies which are formed in accordance with the legislation of a Member State and which fulfil one of the following conditions:

EU companies :

Group 1 : all EU limited liability companies of substantial size and economic power (with 500+ employees and EUR 150 million+ in net turnover worldwide).

Group 2 : Other limited liability companies operating in defined high impact sectors, which do not meet both Group 1 thresholds, but have more than 250 employees and a net turnover of EUR 40 million worldwide and more. For these companies, rules will start to apply 2 years later than for group 1.

Non-EU companies active in the EU with turnover threshold aligned with Group 1 and 2, generated in the EU.

SMEs are not directly in the scope of this proposal however they could be impacted by its provisions as contractors or subcontractors to the companies which are in the scope. Therefore, the proposal includes, accompanying measures, which will support all companies, including SMEs, that may be indirectly affected. Measures include the development of individually or jointly dedicated websites, platforms or portals and potential financial support for SMEs.

Monitoring

Companies should monitor the implementation and effectiveness of their due diligence measures. They should carry out periodic assessments of their own operations, those of their subsidiaries and, where related to the value chains of the company, those of their established business relationships, to monitor the effectiveness of the identification, prevention, minimisation, bringing to an end and mitigation of human rights and environmental adverse impacts. Such assessments should verify that adverse impacts are properly identified, due diligence measures are implemented and adverse impacts have actually been prevented or brought to an end. In order to ensure that such assessments are up-to-date, they should be carried out at least every 12 months and be revised in-between if there are reasonable grounds to believe that significant new risks of adverse impact could have arisen.

Directors’ duty of care

Member States should ensure that, when fulfilling their duty to act in the best interest of the company, directors of companies take into account the consequences of their decisions for sustainability matters, including, where applicable, human rights, climate change and environmental consequences, including in the short, medium and long term.

European Network of Supervisory Authorities

The Commission should set up a European Network of Supervisory Authorities that will bring together representatives of the national bodies, in order to ensure a coordinated approach and enable knowledge and experience sharing.

Fines

Member States should supervise that companies comply with their due diligence obligations. They could impose fines to companies, or issue orders requiring the company to comply with the due diligence obligation.

It is particularly important to enable victims to obtain compensation for damage. Therefore, the proposal will also give those affected by harm the opportunity to hold companies to account. This means that victims will have the possibility to bring a civil liability claim before the competent national courts.

Documents

Activities

History

(these mark the time of scraping, not the official date of the change)

events/9
date
2024-03-19T00:00:00
type
Approval in committee of the text agreed at 1st reading interinstitutional negotiations
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EP
events/9
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2024-03-19T00:00:00
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Approval in committee of the text agreed at 1st reading interinstitutional negotiations
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EP
events/9
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2024-03-19T00:00:00
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Approval in committee of the text agreed at 1st reading interinstitutional negotiations
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EP
events/9
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2024-03-19T00:00:00
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Approval in committee of the text agreed at 1st reading interinstitutional negotiations
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EP
events/9
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2024-03-19T00:00:00
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Approval in committee of the text agreed at 1st reading interinstitutional negotiations
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EP
events/9
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2024-03-19T00:00:00
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Approval in committee of the text agreed at 1st reading interinstitutional negotiations
body
EP
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url: https://oeil.secure.europarl.europa.eu/oeil/popups/sda.do?id=60032&l=en title: Results of vote in Parliament
docs/21
date
2023-06-06T00:00:00
docs
type
European Central Bank: opinion, guideline, report
body
ECB
docs/23
date
2023-07-05T00:00:00
docs
url: https://connectfolx.europarl.europa.eu/connefof/app/exp/COM(2022)0071 title: COM(2022)0071
type
Contribution
body
FR_ASSEMBLY
docs/21
date
2023-06-01T00:00:00
docs
url: https://www.europarl.europa.eu/doceo/document/TA-9-2023-0209_EN.html title: T9-0209/2023
type
Text adopted by Parliament, partial vote at 1st reading/single reading
body
EP
events/6/summary
  • The European Parliament adopted by 366 votes to 225, with 38 abstentions, amendments to the proposal for a Directive of the European Parliament and of the Council on corporate sustainability due diligence and amending Directive (EU) 2019/1937.
  • The matter was referred back to the committee responsible for inter-institutional negotiations.
  • Companies’ obligations
  • Parliament specified that the directive should lay down rules on companies' obligations regarding actual and potential negative impacts on human rights and the environment that they have caused, contributed to or are directly involved in, with regard to their own activities, and those of their subsidiaries.
  • Companies would be required to identify and, where appropriate, prevent, bring to an end or mitigate the negative impact of their activities on human rights and the environment, such as child labour, slavery, labour exploitation, pollution, environmental degradation and loss of biodiversity. They should also monitor and assess the impact of their business partners, not only suppliers, but also sales, distribution, transport, storage, waste management and other areas.
  • Scope of application
  • The new rules will apply to EU-based companies, regardless of their sector, including financial services, with more than 250 employees and a worldwide turnover over EUR 40 million as well as to parent companies with over 500 employees and a worldwide turnover of more than EUR 150 million. Non-EU companies with a turnover higher than EUR 150 million, if at least EUR 40 million was generated in the EU, will also be included.
  • Integration of due diligence
  • Companies covered by the Directive should:
  • - integrate due diligence into their corporate policies, identify and, where necessary, prioritise, prevent, mitigate, remedy, eliminate and minimise potential and actual adverse impacts on human rights, the environment and good governance;
  • - establish or participate in a mechanism for the notification and out-of-court handling of complaints ,
  • - monitor and verify the effectiveness of actions taken in accordance with the requirements set out in the Directive,
  • - communicate publicly on their due diligence and consult relevant stakeholders throughout this process.
  • Member States should ensure that parent undertakings can take action to help ensure that their subsidiaries falling within the scope of the Directive comply with their obligations.
  • Companies should apply a due diligence policy that is proportionate and commensurate to the degree of severity and the likelihood of the adverse impact and commensurate to the size, resources and capacities of the company, taking into account the circumstances of the specific case, including the nature of the adverse impact, characteristics of the economic sector, the nature of the company’s specific activities, products, services, the specific business relationship.
  • In conflict-affected and high-risk regions, companies should uphold their obligations under international humanitarian law and demonstrate heightened, conflict-sensitive due diligence in their operations and business relationships.
  • Prevention of potential negative impacts
  • Companies would be required to take the following steps, as appropriate:
  • - consider establishing contractual arrangements with partners with whom the company has a business relationship, obliging them to comply with the company's code of conduct and, where appropriate, a prevention action plan;
  • - take necessary modifications, improvements to, withdrawals of or investments in, the company’s own operations, such as into management, production or other operational processes, facilities, products and product traceability, projects, services and skills;
  • - adapt business models and strategies, including purchasing practices, including those which contribute to living wages and incomes for their suppliers, in order to prevent potential adverse impacts, and develop and use purchase policies that do not encourage potential adverse impacts on human rights or the environment;
  • - take appropriate measures to ensure that the composition, design and commercialisation of a product or service is in line with Union law and does not lead to adverse impacts, be it individual or collective. In this regard, particular attention shall be paid to potential adverse impact on children.
  • Mitigating actual negative impacts
  • Where a company has caused or contributed to an actual adverse impact, it should take steps to remedy or contribute to the remedy of that adverse impact and any harm it has caused to people or the environment. Remedial measures would aim to restore the affected individuals, groups, communities and/or the environment to a situation equivalent to, or as close as possible to, that which existed prior to the adverse impact.
  • Exchanges with stakeholders
  • The new rules would also require companies to engage in dialogue with those affected by their actions, including human rights and environmental defenders. Companies would also be required to regularly monitor the effectiveness of their due diligence policies. To facilitate investor access, information on a company's due diligence policy should also be available on the European Single Access Point (ESAP).
  • Employees and their representatives should be informed by their company of its due diligence policy and its implementation.
  • Guidelines
  • To provide support to companies or to Member State authorities, the Commission, in consultation with Member States, the European cross-industry and sectoral social partners and other relevant stakeholders, should issue clear and easily understandable guidelines, including general and sector- specific guidance, in order to facilitate compliance in a practical manner. Each Member State should designate one or more national helpdesks for corporate sustainability due diligence.
  • Combating climate change
  • Companies should implement a transition plan to limit global warming to 1.5°C. Companies with more than 1 000 employees on average should have an effective policy in place to ensure that part of any variable remuneration for directors is linked to the company’s transition plan.
  • Sanctions
  • Non-compliant companies will be liable for damages and can be sanctioned by national supervisory authorities. Sanctions include measures such as “naming and shaming”, taking a company’s goods off the market, or fines of at least 5% of the net worldwide turnover . Non-EU companies that fail to comply with the rules will be banned from public procurement in the EU
docs/21
date
2023-06-01T00:00:00
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url: https://www.europarl.europa.eu/doceo/document/TA-9-2023-0209_EN.html title: T9-0209/2023
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2023-06-01T00:00:00
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2023-06-01T00:00:00
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Debate in Parliament
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  • date: 2023-05-31T00:00:00 title: Debate in plenary scheduled
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LEBRETON Gilles
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Identity and Democracy
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https://www.europarl.europa.eu/doceo/document/A-9-2023-0184_EN.html
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Committee report tabled for plenary, 1st reading/single reading
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  • PURPOSE: to lay down an EU legal framework on sustainable corporate governance, including cross-sector corporate due diligence along global value chains.
  • PROPOSED ACT: Directive of the European Parliament and of the Council.
  • ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with the Council.
  • BACKGROUND: EU companies operate in complex surroundings and, especially large ones, rely on global value chains. Given the significant number of their suppliers in the Union and in third countries and the overall complexity of value chains, EU companies, including the large ones, may encounter difficulties to identify and mitigate risks in their value chains linked to respect of human rights or environmental impacts.
  • Identifying these adverse impacts in value chains will become easier if more companies exercise due diligence and thus more data is available on human rights and environmental adverse impacts.
  • A number of Member States have already introduced national rules on due diligence and some companies have taken measures at their own initiative. However, there is need for a larger scale improvement that is difficult to achieve with voluntary action.
  • CONTENT: the proposed Directive will set out a horizontal framework to foster the contribution of businesses operating in the single market to the respect of the human rights and environment in their own operations and through their value chains, by identifying, preventing, mitigating and accounting for their adverse human rights, and environmental impacts, and having adequate governance, management systems and measures in place to this end.
  • Subject matter
  • The proposal lays down rules on obligations for companies regarding actual and potential human rights adverse impacts and environmental adverse impacts, with respect to their own operations, the operations of their subsidiaries, and the value chain operations carried out by entities with whom the company has an established business relationship and on liability for violations of the obligations mentioned above.
  • In order to comply with the corporate due diligence duty, companies need to:
  • - integrate due diligence into policies;
  • - identify actual or potential adverse human rights and environmental impacts;
  • - prevent or mitigate potential impacts;
  • - bring to an end or minimise actual impacts;
  • - establish and maintain a complaints procedure;
  • - monitor the effectiveness of the due diligence policy and measures;
  • - and publicly communicate on due diligence.
  • Scope
  • The proposed Directive shall apply to companies which are formed in accordance with the legislation of a Member State and which fulfil one of the following conditions:
  • EU companies :
  • Group 1 : all EU limited liability companies of substantial size and economic power (with 500+ employees and EUR 150 million+ in net turnover worldwide).
  • Group 2 : Other limited liability companies operating in defined high impact sectors, which do not meet both Group 1 thresholds, but have more than 250 employees and a net turnover of EUR 40 million worldwide and more. For these companies, rules will start to apply 2 years later than for group 1.
  • Non-EU companies active in the EU with turnover threshold aligned with Group 1 and 2, generated in the EU.
  • SMEs are not directly in the scope of this proposal however they could be impacted by its provisions as contractors or subcontractors to the companies which are in the scope. Therefore, the proposal includes, accompanying measures, which will support all companies, including SMEs, that may be indirectly affected. Measures include the development of individually or jointly dedicated websites, platforms or portals and potential financial support for SMEs.
  • Monitoring
  • Companies should monitor the implementation and effectiveness of their due diligence measures. They should carry out periodic assessments of their own operations, those of their subsidiaries and, where related to the value chains of the company, those of their established business relationships, to monitor the effectiveness of the identification, prevention, minimisation, bringing to an end and mitigation of human rights and environmental adverse impacts. Such assessments should verify that adverse impacts are properly identified, due diligence measures are implemented and adverse impacts have actually been prevented or brought to an end. In order to ensure that such assessments are up-to-date, they should be carried out at least every 12 months and be revised in-between if there are reasonable grounds to believe that significant new risks of adverse impact could have arisen.
  • Directors’ duty of care
  • Member States should ensure that, when fulfilling their duty to act in the best interest of the company, directors of companies take into account the consequences of their decisions for sustainability matters, including, where applicable, human rights, climate change and environmental consequences, including in the short, medium and long term.
  • European Network of Supervisory Authorities
  • The Commission should set up a European Network of Supervisory Authorities that will bring together representatives of the national bodies, in order to ensure a coordinated approach and enable knowledge and experience sharing.
  • Fines
  • Member States should supervise that companies comply with their due diligence obligations. They could impose fines to companies, or issue orders requiring the company to comply with the due diligence obligation.
  • It is particularly important to enable victims to obtain compensation for damage. Therefore, the proposal will also give those affected by harm the opportunity to hold companies to account. This means that victims will have the possibility to bring a civil liability claim before the competent national courts.
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