Members' Research Service By / May 18, 2022

Corporate sustainability due diligence: Could value chains integrate human rights and environmental concerns? [EU Legislation in Progress]

EU companies, especially large ones, rely on complex global value chains.

© tIvelin Radkov / Adobe Stock

Written by Stefano Spinaci (1st edition).

Companies can play a key role in building a sustainable economy and society, and in furthering environmental goals. At the same time, their global value chains may pose risks to human rights and the environment. Civil society, governments and companies are increasingly aware of the issue.

A growing number of EU companies have taken initiatives to deploy due diligence processes, often using the existing international voluntary standards on responsible business conduct. Some Member States have started developing their own legal frameworks on corporate due diligence.

To avoid fragmentation and to provide legal certainty to business and citizens, the Commission has proposed a directive laying down rules on corporate due diligence obligations (including on climate change), directors’ duties, civil liability and protection of persons reporting breaches. Supervisory authorities designated by the Member States would be in charge of enforcing the new directive. It would be aligned with international standards on human rights and environmental protection. The Parliament had already called on the Commission to introduce mandatory due diligence legislation in a legislative-initiative resolution of March 2021. It will now examine the Commission proposal following the ordinary legislative procedure.

Versions

Proposal for a directive of the European Parliament and of the Council on corporate sustainability due diligence and amending Directive (EU) 2019/1937
Committee responsible:Committee on Legal Affairs (JURI)COM(2022) 71
23.2.2022
Rapporteur:Lara Wolters (S&D, the Netherlands)2022/0051(COD)
Shadow rapporteurs:Axel Voss (EPP, Gemany)
Adrián Vázquez Lázara (Renew, Spain)
Ordinary legislative procedure
(COD) (Parliament and Council
on equal footing – formerly ‘co-decision’)
Next steps expected: Publication of draft report
EU legislation in progress

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