Proposal for a directive on corporate sustainability due diligence
The EU Commission published its proposal to strengthen and widen the Corporate Sustainability Due Diligence obligations of companies. The proposal introduces a harmonized legal framework in the EU which focuses on companies’ duties on identifying, bringing to an end, preventing, mitigating and accounting for negative human rights and environmental impacts in their own, their subsidiaries and their value chains’ operations.
This will affect EU as well as non-EU companies which are above certain thresholds and operate in specific sectors.
The thresholds for companies in Group One are:
- more than 500 employees and
- greater than EUR 150mn net turnover worldwide.
The thresholds for companies in Group Two, in “high impact sectors” are:
- more than 250 employees and
- greater than EUR 40mn net turnover worldwide.
The high impact sectors include textile, agriculture and extraction of mineral sector. Micro companies and SMEs are not affected by the proposed rules.
In addition, Group One companies need to have a plan to ensure that their business strategy is compatible with limiting global warming to 1.5°C in line with the Paris Agreement.
The next step will be negotiations between EU bodies to determine the final requirements.
Published on 13.07.2022
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