The European Parliament and the Council on the Proposed Directive on Corporate Sustainability Due Diligence

The proposed directive on corporate sustainability due diligence aims to promote sustainable and responsible corporate behavior throughout global value chains. It will require in-scope companies to identify, prevent, end, or mitigate adverse impacts of their activities on human rights and the environment. The European Parliament has amended the proposal to broaden its scope, increase the obligations of companies, and ensure a higher level of accountability and transparency. Key points of the amendments include the extension of the directive to EU-based companies with more than 250 employees and non-EU companies with significant EU turnover. It also broadens the definition of "value chain" and specifies detailed obligations for companies regarding their impacts on human rights and the environment. The directive emphasizes integrating due diligence into corporate policies, establishing mechanisms for complaints, and ensuring the proportionality of due diligence measures. Companies in conflict-affected and high-risk areas must adhere to international humanitarian law and demonstrate conflict-sensitive due diligence. The Council's general approach includes a phased application of the rules, a narrowed definition of "chain of activities," and clarifications on civil liability and directors' duties. The directive introduces sanctions for non-compliant companies and guidelines to support compliance. The goal is to foster a level playing field across the EU and prevent market fragmentation.