Proposal for a Directive on corporate sustainability due diligence
On 1st June 2023, the European Parliament approved the amendments tabled to the European Commission's February 2022 proposal for a Corporate Sustainability Due Diligence Directive, setting out its position in the process of adopting the European standard.
The initiative is in line with the EU Action Plan for Human Rights and Democracy 2020-2024, which includes a commitment by the EU and Member States to strengthen their engagement to actively promote the implementation of international standards for responsible business conduct, such as the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises and the OECD Due Diligence Guidance.
1. Subject matter
The proposal for a Directive on corporate sustainability due diligence aims to promote sustainable and responsible business behaviour among companies.
In particular, the proposed Directive sets the following goals:
1) Improve corporate governance practices.
2) To avoid fragmentation of due diligence requirements in the single market.
3) To increase the liability of companies for adverse effects.
4) Improve access to remedies for affected persons.
5) Complement other existing or proposed measures that directly address specific sustainability challenges or that apply to specific sectors.
2. Scope of application
The criteria for application are based on the number of employees and the worldwide net turnover of EU companies, as well as on the net turnover generated in the common territory in the case of non-EU companies.
In contrast to the European Commission's proposal, the amendments proposed by the European Parliament modify the scope of application of the directive by lowering the thresholds.
3. Obligations
Member States shall ensure that obliged companies integrate due diligence into all their policies and that they implement a due diligence policy.
4. Implementation
Following the approval, on 1 June 2023, of the amendments presented by the European Parliament to the European Commission's proposal for a Directive, the legislative procedure for its definitive approval now continues with the informal tripartite dialogue, where the different points of view are debated in search of a consensus and compromises are obtained to ensure the effectiveness of the legislative process, culminating in the adoption of a final text by the Parliament and the Council.
At RocaJunyent, our ESG department analyses the proposed Due Diligence Directive in the following document which can be downloaded here.
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