What changed between the adopted text of 1 Jun 2023 and the adopted text of 24 Apr 2024

Removed:Article 7 – paragraph 1 a (new): 1a. For the purposes of this Article, in cases where a company may cause a potential adverse impact, appropriate measures shall be understood as measures which aim to prevent or mitigate a potential adverse impact. In cases where a company may contribute to an adverse impact, appropriate measures shall be understood as measures which aim to prevent or mitigate the contribution to the impact, using or increasing the company’s leverage with other responsible parties to prevent or mitigate the potential adverse impact. In cases where a company’s operations, products or services may be directly linked to an adverse impact through its business relationships with other entities, appropriate measures shall be understood as measures which aim to use or increase the company’s leverage with responsible parties to seek to prevent or mitigate the potential adverse impact and to influence the entity causing the impact.

Removed:Article 7 – paragraph 1 b (new): 1b. For the purposes of this Article, it shall be presumed that financial undertakings are directly linked to an adverse impact in their value chain without causing or contributing to it.

Removed:Article 7 – paragraph 2 – introductory part: 2. Companies shall be required to take appropriate measures, including the following actions, where relevant:

Removed:Article 7 – paragraph 2 – point a: (a) where necessary due to the nature or complexity of the measures required for prevention, develop and implement a prevention action plan, with a reasonable and clearly defined timeline for the implementation of appropriate measures and action, and qualitative and quantitative indicators for measuring improvement. The prevention action plan shall be applicable and accurately tailored to the context of companies’ operations and value chain. The development and implementation of a climate transition plan according to Article 15 shall be considered an appropriate measure to prevent environmental adverse impacts related to climate change mitigation pursuant to paragraph 1 of this Article;

Removed:Article 7 – paragraph 2 – point b: (b) consider establishing through contractual provisions with a partner with whom it has a business relationship that it will ensure compliance with the company’s code of conduct and, as necessary, a prevention action plan. Partners with whom the company has a business relationship could be asked to establish corresponding reasonable, non-discriminatory and fair contractual provisions with their partners, to the extent that their activities are part of the company’s value chain. When such contractual assurances are obtained, paragraph 4 shall apply;

Removed:Article 7 – paragraph 2 – point c: (c) make necessary modifications, improvements to, withdrawals of or investments in, the company’s own operations, such as into management, production or other operational processes, facilities, products and product traceability, projects, services and skills;

Removed:Article 7 – paragraph 2 – point c a (new): (ca) adapt business models and strategies, including purchasing practices, including those which contribute to living wages and incomes for their suppliers, in order to prevent potential adverse impacts, and develop and use purchase policies that do not encourage potential adverse impacts on human rights or the environment;

Removed:Article 7 – paragraph 2 – point d: (d) provide targeted and proportionate financial and administrative support for an SME with which the company has a business relationship;

Removed:Article 7 – paragraph 2 – point d a (new): (da) engage with a business relationship about the company’s expectations with regard to preventing and mitigating the potential adverse impacts, including by providing or enabling access to capacity-building, guidance, administrative and financial support such as loans or financing, taking into consideration the resources, knowledge and constraints of the business partner;

Removed:Article 7 – paragraph 2 – point e: (e) in compliance with Union law including competition law, collaborate with other entities, including to increase the company’s ability to bring the adverse impact to an end, in particular where no other action is suitable or effective.

Removed:Article 7 – paragraph 2 – point e a (new): (ea) when there is a direct linkage to impacts occurring in business relationships with other companies operating in the Union, appropriate measures can include notifying the relevant supervisory authority while continuing to make reasonable efforts to seek to prevent or mitigate the impact.

Removed:Article 7 – paragraph 2 a (new): 2a. When distributing or selling a product or providing a service, companies shall take appropriate measures to ensure that the composition, design and commercialisation of a product or service is in line with Union law and does not lead to adverse impacts, be it individual or collective. In this regard, particular attention shall be paid to potential adverse impact on children.

Removed:Article 7 – paragraph 3: deleted

Removed:Article 7 – paragraph 4 – subparagraph 1: The contractual provisions shall be accompanied by measures to support carrying out due diligence.

Removed:Article 7 – paragraph 4 – subparagraph 2: When provisions, including contractual, are established, or a contract is entered into, with a business relationship, the terms used shall be fair, reasonable and non-discriminatory. Where measures to verify compliance are carried out in relation to SMEs, the company shall bear the cost of the independent third-party verification. At the request of the SME, they shall cover the costs in full or shall share them with the company. SMEs may share the results of verifications carried out in relation to themselves with multiple companies. / The contractual provisions sought in accordance with paragraph 2 shall not be such as to result in the transfer of responsibility for carrying out due diligence in accordance with this Directive and of the liability for failing to do so. / In seeking such contractual provisions, companies shall assess whether the business partner can reasonably be expected to comply with those provisions.

Removed:Article 7 – paragraph 5 – subparagraph 1 – introductory part: As regards potential adverse impacts within the meaning of paragraph 1 that a company caused or contributed to and that could not be prevented or adequately mitigated, and where there is no reasonable prospect of change, the company shall be required to refrain from entering into new or extending existing relations with the partner in connection with or in the value chain of which the impact has arisen, and shall, where the law governing their relations so entitles them to, take the following actions as a last resort, in line with responsible disengagement:

Removed:Article 7 – paragraph 5 – subparagraph 1 – point a: (a) temporarily suspend commercial relations with the partner in question, while pursuing prevention and mitigation efforts;

Removed:Article 7 – paragraph 5 – subparagraph 1 – point b: (b) terminate the business relationship with respect to the activities concerned, on account of the severity of the potential adverse impact or if the conditions for temporary suspension under point (a) are not met.

Removed:Article 7 – paragraph 5 – subparagraph 1 a (new): Prior to temporarily suspending commercial relations or terminating the business relationship, companies shall first be required to assess whether the adverse impacts of doing so would be greater than the adverse impact which is intended to be prevented or mitigated. Should that be the case, companies may refrain from temporarily suspending commercial relations or terminating the business relationship. Where companies do temporarily suspend commercial relations or terminate the business relationship, they shall take steps to prevent, mitigate, or bring to an end the impacts of suspension or termination, provide reasonable notice to the business partner and keep that decision under review.

Removed:Article 7 – paragraph 5 – subparagraph 2: Member States shall provide for the availability of an option to suspend or terminate a business relationship in contracts governed by their laws, except for contracts where the parties are obliged by law to enter into them. Companies may refer to supervisory authorities to receive guidance on the course of action to take.

Removed:Article 7 – paragraph 6: 6. By way of derogation from paragraph 5, first subparagraph, point (b), when companies referred to in Article 3, point (a)(iv), provide financial services to entities that cause or contribute to potential adverse impacts within the meaning of paragraph 1, they shall not be required to terminate the financial service contract if this is strictly necessary to prevent bankruptcy to the entity to whom that service is being provided. In addition to paragraph 5, second subparagraph, a decision to terminate the financial service contract in derogation from paragraph 5, first subparagraph, point (b) may only be taken, as a last resort, if the leverage efforts of companies referred to in Article 3, point (a)(iv) have ultimately failed to influence the entity to whom that service is being provided to prevent or adequately mitigate adverse potential impacts.

Removed:Article 8 – paragraph 1: 1. Member States shall ensure that companies take appropriate measures to bring actual adverse impacts that have been, or should have been, identified pursuant to Article 6 to an end, in accordance with this Article.

Removed:Article 8 – paragraph 2: 2. Where the adverse impact cannot immediately be brought to an end, Member States shall ensure that companies adequately mitigate the extent of such an impact, while pursuing all efforts to bring the adverse impact to an end.

Removed:Article 8 – paragraph 2 a (new): 2a. For the purposes of this Article, in cases where a company has caused an actual impact, appropriate measures shall be understood as measures which aim to mitigate the extent of an actual adverse impact, and remediate damage. In cases where a company has contributed to an actual adverse impact, appropriate measures shall be understood as measures which aim to mitigate the contribution to the impact, using or increasing the company’s leverage with other responsible parties to mitigate the potential adverse impact and contribute to remediating damage, to the extent of the contribution. In cases where a company’s operations, products or services are directly linked to an adverse impact through its relationships with other entities, appropriate measures shall be understood as measures which aim to use or increase the company’s leverage with responsible parties to seek to mitigate the adverse impact. A company directly linked to an adverse impact shall consider using its leverage with responsible parties to enable the remediation of any damage caused by an impact.

Removed:Article 8 – paragraph 2 b (new): 2b. For the purposes of this Article, it shall be presumed that financial undertakings are directly linked to an adverse impact in their value chain without causing or contributing to it.

Removed:Article 8 – paragraph 3 – introductory part: 3. Companies shall be required to take appropriate measures, including the following actions, where relevant:

Removed:Article 8 – paragraph 3 – point a: (a) in accordance with Article 8c, neutralise the adverse impact or adequately mitigate its extent by restoring the affected persons and/or the environment to a situation equivalent or as close as possible to their situation prior to the impact. The action shall be proportionate and commensurate to the significance and scale of the adverse impact and to the contribution of the company’s conduct to the adverse impact and to its resources and leverage;

Removed:Article 8 – paragraph 3 – point b: (b) where necessary due to the fact that the adverse impact cannot be immediately brought to an end, develop and implement a corrective action plan with reasonable and clearly defined timelines for the implementation of appropriate measures and action, and qualitative and quantitative indicators for measuring improvement. The preventative action plan shall be applicable and accurately tailored to the context of companies’ operations and value chain. Companies may develop their action plans in cooperation with industry initiatives. The development and implementation of a climate transition plan according to Article 15 shall be considered an appropriate measure to minimise environmental adverse impacts related to climate change mitigation pursuant to paragraphs 1 and 2 of this Article;

Removed:Article 8 – paragraph 3 – point c: (c) choose to establish through contractual provisions with a partner with whom it has a business relationship that it will ensure compliance with a company’s code of conduct, and as necessary, a corrective action plan. Partners with whom the company has a business relationship could be asked to establish corresponding reasonable, non-discriminatory and fair contractual provisions with their partners, to the extent that they are part of the value chain. When such contractual assurances are obtained, paragraph 5 shall apply;

Removed:Article 8 – paragraph 3 – point d: (d) make necessary modifications, improvements to, withdrawals of or investments in, the company’s own operations, such as into management, production or other operational processes, facilities, products and product traceability, projects, services and skills;

Removed:Article 8 – paragraph 3 – point d a (new): (da) adapt business models and strategies, including purchasing practices, including those which contribute to living wages and incomes for their suppliers, in order to bring to an end or mitigate actual adverse impacts, and develop and use purchase policies that do not encourage actual adverse impacts on human rights or the environment;

Removed:Article 8 – paragraph 3 – point e: (e) provide targeted and proportionate financial and administrative support for an SME with which the company has a business relationship;

Removed:Article 8 – paragraph 3 – point e a (new): (ea) engage with a business relationship about the company’s expectations with regard to bringing to an end and mitigating actual adverse impacts, including by providing or enabling access to capacity-building, guidance, administrative and financial support such as loans or financing, taking into consideration the resources, knowledge and constraints of the business partner;

Removed:Article 8 – paragraph 3 – point f a (new): (fa) when there is a direct linkage to impacts occurring in business relationships with other companies operating in the Union, appropriate measures can include notifying the relevant supervisory authority while continuing to make reasonable efforts to seek to bring the impact to an end or mitigate the impact.

Removed:Article 8 – paragraph 3 a (new): 3a. When distributing or selling a product or providing a service, companies shall take appropriate measures to ensure that the composition, design and commercialisation of a product or service is in line with Union law and does not lead to adverse impacts, be it individual or collective. In this regard, particular attention shall be paid to potential adverse impact on children.

Removed:Article 8 – paragraph 4: deleted

Removed:Article 8 – paragraph 5 – subparagraph 1: The contractual provisions shall be accompanied by measures to support carrying out due diligence.

Removed:Article 8 – paragraph 5 – subparagraph 2: When provisions, including contractual, are established, or a contract is entered into, with a business relationship, the terms used shall be fair, reasonable and non-discriminatory. Where measures to verify compliance are carried out in relation to SMEs, the company shall bear the cost of the independent third-party verification. SMEs may share the results of the verifications carried out in relation to themselves with multiple companies.

Removed:Article 8 – paragraph 5 – subparagraph 2 a (new): The contractual provisions sought in accordance with paragraph 3 shall not be such as to result in the transfer of responsibility for carrying out due diligence in accordance with this Directive and the liability for failing to do so.

Removed:Article 8 – paragraph 5 – subparagraph 2 b (new): In seeking such contractual provisions, companies shall assess whether the business partner can reasonably be expected to comply with those provisions.

Removed:Article 8 – paragraph 6 – subparagraph 1 – introductory part: As regards actual adverse impacts within the meaning of paragraph 1 that a company caused or contributed to, and that could not be brought to an end or the extent of which could not be mitigated, and where there is no reasonable prospect of change, the company shall be required to refrain from entering into new or extending existing relations with the partner in connection to or in the value chain of which the impact has arisen and shall, where the law governing their relations so entitles them to, take one of the following actions as a last resort, in line with responsible disengagement:

Removed:Article 8 – paragraph 6 – subparagraph 1 – point a: (a) temporarily suspend commercial relationships with the partner in question, while pursuing prevention and mitigation efforts

Removed:Article 8 – paragraph 6 – subparagraph 1 – point b: (b) terminate the business relationship with respect to the activities concerned, on account of the severity of the actual adverse impact, or if the conditions for temporary suspension under point (a) are not met.

Removed:Article 8 – paragraph 6 – subparagraph 1 a (new): Prior to temporarily suspending commercial relations or terminating the business relationship, companies shall first be required to assess whether the adverse impacts of doing so would be greater than the adverse impact which is intended to be brought to an end or mitigated. Should that be the case, companies may refrain from temporarily suspending commercial relations or terminating the business relationship. Where companies do temporarily suspend commercial relations or terminate the business relationship, they shall take steps to prevent, mitigate or bring to an end the impacts of suspension or termination, provide reasonable notice to the business partner and keep that decision under review.

Removed:Article 8 – paragraph 6 – subparagraph 2: Member States shall provide for the availability of an option to suspend or terminate a business relationship in contracts governed by their laws, except for contracts where the parties are obliged by law to enter into them. Companies may refer to supervisory authorities to receive guidance on the course of action to take.

Removed:Article 8 – paragraph 7: 7. By way of derogation from paragraph 6, point (b), when companies referred to in Article 3, point (a)(iv), provide financial services to entities that cause or contribute to actual adverse impacts in the meaning of paragraph 1, they shall not be required to terminate the financial service contract, if this is strictly necessary to prevent bankruptcy to the entity to whom that service is being provided. In addition to paragraph 6, second subparagraph, a decision to terminate the financial service contract in derogation from paragraph 6, point (b) may only be taken, as a last resort, if the leverage efforts of companies referred to in Article 3(1), point (a)(iv) have ultimately failed to influence the entity to whom that service is being provided to bring actual adverse impacts to an end or to minimise their extent.

Removed:Article 8 a (new): Article 8a / Appropriate measures by institutional investors and asset managers to induce their investee companies to bring actual adverse impacts caused by them to an end / 1. Member States shall ensure that institutional investors and asset managers take appropriate measures as described in paragraph 3 of this Article to induce their investee companies to bring actual adverse impacts to an end that have been, or should have been identified pursuant to Article 6. / 2. Where the adverse impact cannot be brought to an end, Member States shall ensure that institutional investors and asset managers induce their investee companies to minimise the extent of such an impact. / 3. Where relevant, institutional investors and asset managers shall be required to engage with the investee company and exercise voting rights in line with Article 3g (1), point (a), of Directive 2007/36/EC [SRD2], in order to induce the management body of an investee company to bring the actual impact to and end or minimise its extent. The action sought from the investee company shall be proportionate to the significance and scale of the adverse impact and to the contribution of the investee company’s conduct to the adverse impact. Likewise, the actions required from institutional investors and asset managers shall be proportionate and commensurate, and shall take due account of the degree of control they have over the investee company.

Removed:Article 8 b (new): Article 8b / Prioritising actual and potential adverse impacts / 1. In cases where it is not possible to prevent, bring to an end or mitigate all identified adverse impacts simultaneously through appropriate measures as outlined in Articles 7 and 8, companies may prioritise the order in which they take appropriate measures on the basis of the likelihood and severity of adverse impacts. / 2. Companies shall be required to take appropriate measures as per paragraph 1 according to the severity and likelihood of impacts and taking into account risk factors. / 3. Once the most severe and likely adverse impacts are addressed in accordance with Articles 7 or 8 in a reasonable time, the company shall address less severe and less likely adverse impacts.

Removed:Article 8 c (new): Article 8c / Remediation of actual adverse impacts / 1. Member States shall ensure that where a company has caused or contributed to an actual adverse impact, that company shall take appropriate measures to remediate that adverse impact and the possible harm it has caused to people or the environment, or contribute to its remediation. The remediation may be proposed as a result of a non-judicial grievance procedure as laid down in Article 9. / 2. Such remedial measures shall aim to restore the affected persons and groups or communities and/or the environment to a situation equivalent or as close as possible to their situation prior to the impact. They may include compensation, restitution, rehabilitation, public apologies, reinstatement or a contribution to investigations. Companies shall prevent additional harm being caused. / 3. Member states shall ensure that the single helpdesk as designated pursuant to Article 14a acts as a contact point for due diligence mediation in order to assist companies and stakeholders in finding remedial solutions. In performing those duties, the single helpdesk shall be impartial, predictable and equitable. / 4. Where a company is directly linked to an adverse impact, Member States shall encourage its voluntary participation in any remedial measures, where appropriate, and encourage companies to consider using their leverage with responsible parties to enable the remediation of any damage caused by an impact.

Removed:Article 8 d (new): Article 8d / Carrying out meaningful engagement with affected stakeholders / 1. Member States shall ensure that companies take appropriate measures to carry out meaningful engagement with affected stakeholders that allows for genuine interaction and dialogue in their due diligence process. To this end, the engagement shall cover information and consultation of affected stakeholders and shall be comprehensive, structural, effective, timely and culturally and gender sensitive. / 2. Where it is not possible to carry out meaningful engagement with affected stakeholders, or where engagement with additional expert perspectives is useful to allow the company to comply fully with the requirements of this Directive, in particular in the context of scoping and prioritisation decisions under Article 6, companies shall engage in a meaningful way with other relevant stakeholders, such as civil society organisations, or legal or natural persons defending human rights or the environment in order to gain credible insights into potential or actual adverse impacts, in order to be able to comply with the requirements of this Directive. / 3. Companies shall, as appropriate, provide comprehensive, targeted and relevant information to affected stakeholders about their value chain and their actual or potential adverse impacts on the environment, human rights and good governance. / 4. Affected stakeholders shall be allowed to request additional written information, which shall be provided by the com…

Removed:Article 9 – title: Notification and non-judicial grievance mechanism

Removed:Article 9 – paragraph 1: 1. Member States shall ensure that companies provide publicly available and effective notification and non-judicial grievance mechanisms at operational level, that can be used by persons and organisations listed in paragraph 2 to notify them of or raise grievances and request remediation, where they have legitimate information or concerns regarding actual or potential adverse human rights or environmental impacts with respect to the companies’ own operations, the operations of their subsidiaries and their value chains. Member States shall ensure that companies are able to provide such a possibility to submit notifications and grievances through collaborative arrangements, including industry initiatives, with other companies or organisations, by participating in multi-stakeholder grievance mechanisms or joining a global framework agreement.

Removed:Article 9 – paragraph 2 – introductory part: (2) Member States shall ensure that the grievances may be submitted by:

Removed:Article 9 – paragraph 2 – point a: (a) persons who are affected or have reasonable grounds to believe that they might be affected by an adverse impact, and the legitimate representatives of such individuals, or, in cases where there are no individuals, groups or communities affected by an adverse impact on the environment, credible and experienced organisations whose purpose includes the protection of the environment,

Removed:Article 9 – paragraph 2 – point c: deleted

Removed:Article 9 – paragraph 2 a (new): 2a. Member States shall ensure that notifications may be submitted by the persons and organisations listed in points (a) and (b) of paragraph 2, and in addition, in as far as they are not covered under those points, by the following: / (a) legal or natural persons defending human rights or the environment; / (b) civil society organisations active in the areas related to the value chain concerned.

Removed:Article 9 – paragraph 3: 3. Member States shall ensure that the companies establish a procedure for dealing with notifications and grievances referred to in paragraph 1, including a procedure when the company considers the notifications or grievances to be unfounded, and inform the relevant affected stakeholders, and their representatives where applicable, and other relevant persons or organisations covered by paragraphs 2 and 2a, of those procedures. Member States shall ensure that where the notification or grievance is well-founded, the adverse impact that is the subject matter of the notification or grievance is deemed to be identified within the meaning of Article 6.

Removed:Article 9 – paragraph 3 a (new): 3a. Member States shall ensure that when companies establish or participate in notification and grievance mechanisms, those mechanisms are legitimate, accessible, predictable, equitable, transparent, rights-compatible, gender- and culturally responsive, and based on engagement and dialogue. Notification and grievance mechanisms shall be designed and operated in a manner that is informed by the perspectives of stakeholders and adapted to the needs of people who may be most vulnerable to adverse impacts. Companies shall adopt and implement policies and processes to maintain the independence of the notification and grievance mechanism.

Removed:Article 9 – paragraph 3 b (new): 3b. Companies shall take measures to ensure that persons submitting notifications or grievances are free from retaliation or retribution, including by ensuring that notifications and grievances can be raised either anonymously or confidentially, in accordance with national law and adopt and implement policies to that effect. Where information needs to be shared, it shall be in a manner that does not endanger the stakeholders’ safety, including by not disclosing their identity.

Removed:Article 9 – paragraph 3 c (new): 3c. Member States shall ensure that persons submitting grievances under paragraph 2, where they do not do so anonymously, are entitled to receive timely and appropriate follow-up from the company with which they have filed a grievance pursuant to paragraph 1 and shall also be entitled: / (a) to be provided with the reasoning as to whether a grievance has been considered founded or unfounded and provided with information on the steps and actions taken; / (b) to engage with the company’s representatives at an appropriate level to discuss potential or actual adverse impacts that are the subject matter of the grievance; / (c) to request that companies remediate or contribute to the remediation of actual adverse impacts, in line with Article 8c.