On Tuesday, the Legal Affairs Committee approved a draft law, agreed with EU governments, requiring companies to mitigate their negative impact on human rights and the environment.
MEPs on the Legal Affairs Committee adopted by 20 votes in favor, 4 against and no abstentions new, called “checks necessary”, requiring companies to mitigate the negative impacts of their activities on human rights and the environment , including slavery, child labor, labor exploitation, loss of biodiversity, pollution and destruction of natural heritage. The obligation to prevent, terminate or mitigate their negative effects also concerns upstream partners of companies working in design, manufacturing, transport and supply, as well as downstream partners, in particular those dealing with the distribution, transportation and storage.
Scope and transition plan
The rules will apply to UE1 as well as companies and parent companies from third countries employing more than 1,000 employees and having a turnover above €450 million, as well as franchises with a turnover greater than 80 million euros if at least 22.5 million were generated by royalties.
Companies will also need to integrate due diligence into their policies and risk management systems, and adopt and implement a transition plan making their business model compatible with the 1.5°C global warming limit set by law. Paris Agreement. The transition plan should include the company’s time-bound climate change goals, key actions on how to achieve them, and an explanation, including figures, of the investments needed to implement the plan.
Civil liability and fines
Companies will be liable if they fail to comply with their due diligence obligations and must fully compensate their victims. They will also need to adopt complaints mechanisms and engage with individuals and communities harmed by their actions.
Member states will designate a supervisory authority to monitor, investigate and impose sanctions on companies that do not comply. These can include fines of up to 5% of companies’ net global turnover. Foreign companies will be required to appoint their authorized representative based in the Member State in which they operate, who will communicate on their behalf with supervisory authorities on compliance with due diligence. The Commission will create the European network of supervisory authorities to support cooperation between supervisory bodies.
Citation
After the committee vote, lead MEP Lara Wolters (S&D, NL) said: “I am delighted that a clear majority of members of the Legal Affairs Committee today supported the Due Diligence Directive. It is high time that this legislation was passed, to put an end to corporate abuses and to clarify what is expected of them. I look forward to the vote in plenary and am confident that it will be adopted quickly.”
Next steps
Once formally approved by the European Parliament and the Member States, the directive will enter into force on the twentieth day following its publication in the Official Journal of the EU.
Background
The Commission’s proposal introduced on February 23, 2022 is in line with the European Parliament’s 2021 call for mandatory due diligence legislation. It complements other existing and upcoming legislative acts in the area, such as the regulation of deforestation, regulation of conflict minerals and the draft regulation banning products made with forced labor.
Originally published in The European Times.
source link eu news
