Duty of care: EP adopts rules to defend human rights and the environment | here

Parliament approved, by 374 votes for, 235 against and 19 abstentions, the new directive duty of care, agreed with the Council, which requires businesses and their upstream and downstream partners, including supply, production and distribution, to prevent, remove or reduce their negative impact on human rights and environment. This impact includes slavery, child labor, labor exploitation, loss of biodiversity, pollution or destruction of natural heritage.

Risk-based approach and transition plan

The rules apply to EU companies and parent companies with more than 1,000 employees and a worldwide turnover of more than €450 million. They also apply to franchises or licensing agreements that guarantee a common corporate identity, with a worldwide turnover exceeding 80 million euros if at least 22.5 million euros results from royalty fee. Third country companies, parent companies and companies with franchise or licensing agreements in the EU and achieving the same turnover are also covered by the legislation. These companies must integrate due diligence into their policies, make the associated investments, seek to obtain contractual guarantees from their partners, improve their business plan or even support small and medium-sized partner companies to ensure compliance with the new obligations. Companies must also adopt a transition plan to make their economic model compatible with the global warming limit of 1.5°C set in the law. Paris Agreement.

Fines and compensation for victims

Member States are required to provide information to businesses online details of its due diligence obligations via convenient portals containing Commission guidance. They must also create or designate supervisory authorities to investigate and apply sanctions to non-compliant companies. These include whistleblowing and disclosure, as well as fines of up to 5% of companies' net turnover worldwide. The Commission will create a European network of supervisors to support cooperation and facilitate the sharing of good practices. Companies are responsible for damages caused by failure to comply with their due diligence obligations and must fully compensate their victims.

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After the plenary vote, MEP Lara Wolters (S&D, Netherlands) said: Today's vote is an essential step for responsible business conduct and an important step towards ending exploitation. people and the planet by businesses.cowboys“. This law is a difficult compromise and the result of many years of difficult negotiations. I am proud of what we have achieved with our progressive allies. In the next legislature, we will not only fight for its implementation work quickly, but also to make the European economy even more sustainable.

Next steps
The directive must now be formally approved by the Council, signed and published in the Official Journal of the EU. It comes into effect after 20 days. Member States have two years to transpose the new rules into their national legislation.

The new rules (with the exception of reporting obligations) will be gradually applied to companies in the EU (and third countries with an identical turnover in the EU):

• from 2027 – to companies with more than 5,000 employees and a turnover of more than 1.5 billion euros worldwide;
• from 2028 – to companies with more than 3,000 employees and a turnover of 900 million euros worldwide;
• from 2029 – the remaining companies covered by the scope of the directive (including those with more than 1,000 employees and a turnover above 450 million euros worldwide).

Context

Parliament has repeatedly called for greater corporate accountability and mandatory due diligence legislation. A proposal of the Commission, presented on 23 February 2022, complements other current and future legislative acts, such as the deforestation regulationthe Conflict Minerals Regulation and the Forced Labor Prohibition Regulation.

By approving this legislation, the European Parliament responds to citizens' expectations regarding: sustainable consumption, as in point 13 of proposal 5; strengthen the ethical dimension of commercial relations, as expressed in points 2 and 3 of proposition 19; and the sustainable growth model, points 1 and 8 of proposition 11 of the conclusions of the Conference on the Future of Europe.