The European Commission has adopted a proposal for a Directive on corporate sustainability due diligence. Its aim is to foster sustainable and responsible corporate behaviour and to anchor human rights and environmental considerations in companies’ operations and corporate governance. The new rules will ensure that businesses address adverse impacts of their actions, including in their value chains inside and outside Europe.

Companies impacted by the rules are:

• Large EU limited liability companies:

Group 1: +/- 9,400 companies – 500+ employees and net EUR 150 million+ turnover worldwide.

Group 2: +/- 3,400 companies in high-impact sectors. – 250+ employees and net EUR 40+ million turnover worldwide, and operating in defined high impact sectors, e.g. textiles, agriculture, extraction of minerals. For this group, the rules start to apply two years later than for group 1.

• Non–EU companies: +/- 2,600 companies in Group 1 and +/- 1,400 in Group 2: Third country companies active in the EU with turnover threshold aligned with Group 1 and 2, generated in the EU.
• SMEs: Micro companies and SMEs are not concerned by the proposed rules. However, the proposal provides supporting measures for SMEs, which could be indirectly affected.

The proposal will go to the European Parliament and the Council for approval. Once adopted, Member States will have two years to transpose the Directive into national law and communicate the relevant texts to the Commission.

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