The European Commission adopted in February 2022 a proposal for a directive on corporate sustainability due diligence. This proposal aims to promote sustainable and responsible business behaviour in global supply chains. Companies are required to identify and, if necessary, prevent, address or mitigate the negative impacts of their activities on human rights and the environment. This new regulation will provide legal certainty and a level playing field for businesses, and greater transparency for consumers and investors.
The proposal establishes a duty of due diligence for companies in relation to their own activities, as well as their subsidiaries. In addition, companies must have a plan to ensure that their business strategy is compatible with limiting global warming to 1.5 °C under the Paris Agreement.
The due diligence rules will apply to EU companies that meet certain criteria of size and economic power, as well as to third-country companies deploying their activities in the EU and reaching a certain turnover threshold. For their part, SMEs are not directly included in the scope of this proposal.
National administrative authorities shall be responsible for monitoring compliance with these rules and may impose fines in case of non-compliance. Victims will also have the opportunity to take legal action for damages that could have been avoided with proper due diligence.
The proposal also includes support measures for all enterprises, including SMEs, which could be indirectly affected by this measure.
In any case, the aim is to ensure that the European Union, both the public and private sectors, fully complies with its international commitments on human rights and sustainable development.