opinion parliamentary committee, 1 February 2023
On the proposal for a directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937
Document DEVE-AD-736709 · (COM(2022)0071 – C90050/2022 – 2022/0051(COD))
Committee on Development · Rapporteur: Pierfrancesco Majorino
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Short justification 501 paragraphs
The way in which companies operate in developing countries is a key factor for respect for human rights, the environment and the rule of law and good governance systems of these countries and towards the achievement of their sustainable development goals in line with United Nations Agenda 2030. Therefore, it is important to ensure that companies behave responsibly, avoid harm and contribute to the economic, social and environmental development of developing countries.
This Directive represents a very important step forward in this line. The Rapporteur welcomes the proposal, however believes that significant improvements are needed to ensure a responsible behaviour of companies in developing countries.
A holistic approach needs to be ensured by means of strengthening the respect for the rule of law and good governance systems in the countries, regions or territories where the company operates. Business success depends very much on the sustainability of the societies where they operate and business could play an important role in advancing the rule of law and good governance. In this sense companies should refrain from corruption and other bad practices that could undermine the weak institutional and legal frameworks existing in many developing countries and support existing structures, complying with laws and regulations throughout the company’s operations and value chain including tax laws and policies, honouring contractual obligations and commercial agreements and the dispute resolution procedures and decisions at all levels
The scope should be expanded to include as many companies as possible and some key sectors should be added such as oil and gas productions and oil refining sector or constructions, logistics and infrastructures. Definitions have to be strengthened in order to include the adverse rule of law and good governance impacts, to provide some guidance on adverse environmental impacts as well as to reinforce the stakeholder definition, including by adding a new category of vulnerable stakeholders.
Given the crucial role that stakeholders are called to play throughout the whole process of due diligence a new article is proposed in order to define their meaningful involvement in the process as well as improvements in other legal provisions.
Some amendments have been introduced in order to ensure that companies map their value chain and publicly disclose relevant information, that any decision to suspend or terminate a business is done with the meaningful engagement of relevant stakeholders and that it addresses the adverse impacts that it might cause.
In accordance with international standards, non-judicial remedies represent useful mechanisms to provide remedies and compensation to victims or people with legitimate interest or contribute to repair the damaged cause. However, to ensure that they can fulfil their objectives, they must comply with a series of requirements as set out in the United Nations Guiding Principles on Business and Human Rights.
Notwithstanding reporting requirements under Directive 2013/34, Member States should ensure that companies report on matters covered by this Directive as well as related information key to support companies and its subsidiaries and business partners operating in developing countries to identify, prevent and effectively address actual or potential adverse impacts.
The Rapporteur has also suggested some guidelines the Commission should provide in order to support companies and Member States authorities on how companies should fulfil their due diligence obligations, such as on impacts on rule of law and good governance, on the implementation of enhanced due diligence in conflict affected areas, on safety, effective and meaningful engagement with stakeholders in all due diligence processes or regarding the mapping of companies value chain and efficient process to monitor business partners behaviour through the value chain.
The accompanying measures have also been reinforced to take into account the need to step up the support to be provided in developing countries to build an enabling environment and protecting civic space, to raise awareness and capacity building for communities and stakeholders, including trade unions, NGOs or local associations , to monitor companies behaviour and impacts or to support access to justice for victims and persons and groups with legitimate interest.
Finally, it is essential to reinforce the civil liability ensuring that Member States take the necessary measures to make access to justice a reality, including by addressing the existing barriers to it and reversing the burden of proof towards companies.
AMENDMENTS
Read the rest (489 paragraphs)
The Committee on Development calls on the Committee on Legal Affairs, as the committee responsible, to take into account the following amendments:
Amendment 1
Proposal for a directive
Recital 1
| Text proposed by the Commission | Amendment |
|---|---|
| (1) The Union is founded on the respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights as enshrined in the EU Charter of Fundamental Rights. Those core values that have inspired the Union’s own creation, as well as the universality and indivisibility of human rights, and respect for the principles of the United Nations Charter and international law, should guide the Union’s action on the international scene. Such action includes fostering the sustainable economic, social and environmental development of developing countries. | (1) The Union is founded on the respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights as enshrined in the EU Charter of Fundamental Rights. Article 191 of the Treaty on the Functioning of the European Union (TFEU) states that Union policy is to contribute to preserving, protecting and improving the quality of the environment, protecting human health, prudent and rational utilisation of natural resources and promoting measures at international level to deal with regional or worldwide environmental problems, and in particular combating climate change. Those core values that have inspired the Union’s own creation, as well as the universality and indivisibility of human rights, and respect for the principles of the United Nations Charter and international law, should guide the Union’s action on the international scene. Such action includes fostering the sustainable economic, social and environmental development of developing countries. Furthermore, Article 208 TFEU states the Union is to take into account the objectives of development cooperation in the policies that it implements which are likely to affect developing countries. |
Amendment 2
Proposal for a directive
Recital 2 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (2a) To achieve those objectives, a systemic change to the Union economy is needed to ensure that the green transition is achieved in a just and inclusive way, within planetary boundaries. Achievement of the Sustainable Development Goals (SDGs) by the Union and its support for third countries to do the same will be essential if the Union is to demonstrate global leadership in achieving sustainability transitions. |
Amendment 3
Proposal for a directive
Recital 4
| Text proposed by the Commission | Amendment |
|---|---|
| (4) The behaviour of companies across all sectors of the economy is key to success in the Union’s sustainability objectives as Union companies, especially large ones, rely on global value chains. It is also in the interest of companies to protect human rights and the environment, in particular given the rising concern of consumers and investors regarding these topics. Several initiatives fostering enterprises which support value-oriented transformation already exist on Union77 , as well as national78 level. | (4) The behaviour of companies across all sectors of the economy is key to success in the Union’s sustainability objectives as Union companies, especially large ones, rely on global value chains. It is also in the interest of companies to protect human rights, labour rights and the environment, in particular given the rising concern of consumers and investors regarding these topics. Several initiatives fostering enterprises which support value-oriented transformation already exist on Union77 , as well as national78 level. |
| 77 ‘Enterprise Models and the EU agenda’, CEPS Policy Insights, No PI2021-02/ January 2021. | 77 ‘Enterprise Models and the EU agenda’, CEPS Policy Insights, No PI2021-02/ January 2021. |
| 78 E.g. https://www.economie.gouv.fr/entreprises/societe-mission | 78 E.g. https://www.economie.gouv.fr/entreprises/societe-mission |
Amendment 4
Proposal for a directive
Recital 6
| Text proposed by the Commission | Amendment |
|---|---|
| (6) The concept of human rights due diligence was specified and further developed in the OECD Guidelines for Multinational Enterprises80 which extended the application of due diligence to environmental and governance topics. The OECD Guidance on Responsible Business Conduct and sectoral guidance81 are internationally recognised frameworks setting out practical due diligence steps to help companies identify, prevent, mitigate and account for how they address actual and potential impacts in their operations, value chains and other business relationships. The concept of due diligence is also embedded in the recommendations of the International Labour Organisation (ILO) Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy.82 | (6) The concept of human rights due diligence was specified and further developed in the OECD Guidelines for Multinational Enterprises80 which extended the application of due diligence to environmental and governance topics. The OECD Guidance on Responsible Business Conduct and sectoral guidance81 are internationally recognised frameworks setting out practical due diligence steps to help companies identify, prevent, mitigate and account for how they address actual and potential impacts in their operations, value chains and other business relationships, Those guidelines also require companies to respect international humanitarian law and apply a higher standard of conflict-sensitive due diligence, where those companies operate in conflict-affected areas. The concept of due diligence is also embedded in the recommendations of the International Labour Organisation (ILO) Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy.82 |
| 80 OECD Guidelines for Multinational Enterprises, 2011 updated edition, available at http://mneguidelines.oecd.org/guidelines/.https://mneguidelines.oecd.org/mneguidelines/ | 80 OECD Guidelines for Multinational Enterprises, 2011 updated edition, available at http://mneguidelines.oecd.org/guidelines/.https://mneguidelines.oecd.org/mneguidelines/ |
| 81 OECD Guidance on Responsible Business Conduct, 2018, and sector-specific guidance, available at https://www.oecd.org/investment/due-diligence-guidance-for-responsible-business-conduct.htm. | 81 OECD Guidance on Responsible Business Conduct, 2018, and sector-specific guidance, available at https://www.oecd.org/investment/due-diligence-guidance-for-responsible-business-conduct.htm. |
| 82 The International Labour Organisation’s “Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, Fifth Edition, 2017, available at: https://www.ilo.org/empent/Publications/WCMS_094386/lang--en/index.htm. | 82 The International Labour Organisation’s “Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, Fifth Edition, 2017, available at: https://www.ilo.org/empent/Publications/WCMS_094386/lang--en/index.htm. |
Amendment 5
Proposal for a directive
Recital 7
| Text proposed by the Commission | Amendment |
|---|---|
| (7) The United Nations’ Sustainable Development Goals83, adopted by all United Nations Member States in 2015, include the objectives to promote sustained, inclusive and sustainable economic growth. The Union has set itself the objective to deliver on the UN Sustainable Development Goals. The private sector contributes to those aims. | (7) The United Nations’ Sustainable Development Goals83, adopted by all United Nations Member States in 2015, include the objectives to promote sustained, inclusive and sustainable economic growth. The Union has set itself the objective to deliver on the UN Sustainable Development Goals. The private sector should effectively contribute to those aims. |
| 83 https://www.un.org/ga/search/view_doc. asp?symbol=A/RES/70/1&Lang=E. | 83 https://www.un.org/ga/search/view_doc. asp?symbol=A/RES/70/1&Lang=E. |
Amendment 6
Proposal for a directive
Recital 10 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (10a) Due diligence practices under this Directive should contribute to preserving and restoring marine and terrestrial biodiversity by, inter alia, halting, mitigating and reversing biodiversity loss and improving the state of ecosystems and their functions and the services they provide, and by improving the state of the environment, in particular air, water and soil, as part of the main objectives of protecting the health and well-being of people, animals and ecosystems from environment-related risks, in line with Agenda 2030. |
Amendment 7
Proposal for a directive
Recital 11 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (11a) The identification, prevention and mitigation of negative environmental impacts is a key aspect of this Directive. In that sense, the concept of environmental impact covers the overall possible harms to the climate or environment resulting from the violation of international commitments and Union legislation and it also includes impacts on air quality and air pollution; on water pollution or contamination and access to and availability of water resources; on pollution, contamination, erosion and use of land; on biodiversity including damage to wildlife, seabed and the marine environment, flora, fauna, natural habitats and ecosystems; on human health according to the 'One Health' approach; on climate, including through greenhouse gas emissions and the destruction or degradation of sinks; and on the transition to the circular economy, including through damage to reusability and recyclability, such as contamination of waste streams with hazardous substances. |
Amendment 8
Proposal for a directive
Recital 13 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (13a) Along with respect for human rights, the environment and the rule of law, the due diligence process should also include good governance. Good governance refers to rules, processes, and behaviour by which interests are articulated, resources are managed, and power is exercised in society. It includes the process whereby public institutions conduct public affairs and manage public resources in a manner that promotes the rule of law and the realisation of human rights, including civil, political, economic, social and cultural rights). Core elements of good governance are transparency, integrity, lawfulness, sound policy, participation, accountability, responsiveness, and the absence of corruption and wrongdoing. Good governance has to be considered as key to achieving sustainable development and human well-being. This is, in particular, related to the control of corruption, which has been demonstrated to affect well-being both directly and indirectly. |
Amendment 9
Proposal for a directive
Recital 13 b (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (13b) It is fundamental to ensure that human rights due diligence is implemented in a gender-responsive manner acknowledging that gender inequality is embedded both in state and market institutions and represents a constraint in the realisation of women’s and girl’s rights. Human rights violations are not gender neutral and should not be treated as such. Women are often disproportionately affected by adverse business practices, which requires a due diligence process that responds to their specific needs. Member States should ensure that companies apply gender lens throughout all the steps and activities of the due diligence process and actively support gender equality. Companies should work with suppliers to set up a social auditing system in a gender-sensitive way. Furthermore, Member States should ensure that gender-responsive remediation processes and mechanisms are to be designed to ensure equal access and equal outcomes for all genders. To achieve that, corporate grievance mechanisms should be accessible efficient, safe and fair to women, taking account of barriers women are more likely to face. |
Amendment 10
Proposal for a directive
Recital 14
| Text proposed by the Commission | Amendment |
|---|---|
| (14) This Directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification, prevention and mitigation, bringing to an end and minimisation of potential or actual adverse human rights and environmental impacts connected with companies’ own operations, subsidiaries and value chains. | (14) This Directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies in which they operate, including outside the Union market through the identification, prevention and mitigation, bringing to an end and minimisation of potential or actual adverse human rights, adverse labour rights, environmental, rule of law and good governance impacts connected with companies’ own operations, subsidiaries and value chains particularly in developing countries. |
Amendment 11
Proposal for a directive
Recital 14 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (14a) This Directive should ensure that companies carry out due diligence applying a risk based approach, in line with international standards, to ensure that they comply with requirements set out in this Directive. That means that this Directive should set a base set of requirements for companies from all sectors to carry out due diligence covering their value chains broadly in order to identify where the severe impacts are most likely to occur and to prioritise how to mitigate and address those risks once identified. |
Amendment 12
Proposal for a directive
Recital 15
| Text proposed by the Commission | Amendment |
|---|---|
| (15) Companies should take appropriate steps to set up and carry out due diligence measures, with respect to their own operations, their subsidiaries, as well as their established direct and indirect business relationships throughout their value chains in accordance with the provisions of this Directive. This Directive should not require companies to guarantee, in all circumstances, that adverse impacts will never occur or that they will be stopped. For example with respect to business relationships where the adverse impact results from State intervention, the company might not be in a position to arrive at such results. Therefore, the main obligations in this Directive should be ‘obligations of means’. The company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. Account should be taken of the specificities of the company’s value chain, sector or geographical area in which its value chain partners operate, the company’s power to influence its direct and indirect business relationships, and whether the company could increase its power of influence. | (15) Companies should take appropriate steps to set up and carry out due diligence measures, with respect to their own operations, their subsidiaries, as well as their business relationships throughout their value chains in accordance with the provisions of this Directive. When companies are not in a position to avoid adverse impacts from the value chains, they should be required to terminate the harmful business relationships and to modify the structure of their value chains in order to ensure that that no longer contributes to or can be a cause of the adverse impact. The company should take the appropriate measures, which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. Account should be taken of the specificities of the company’s value chain, sector or geographical area in which its value chain partners operate, the company’s power to influence its business relationships, and whether the company could increase its power of influence. |
Amendment 13
Proposal for a directive
Recital 16 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (16a) Companies should develop and adapt the due diligence measures in light of the political context in which those companies, their subsidiaries and their business relationships operate throughout their value chains. In conflict-affected and high-risk areas, companies run additional risk of being involved in severe human rights abuses. In those areas, companies should therefore undertake heightened, conflict-sensitive due diligence, in order to address those heightened risks and to ensure that they do not facilitate, finance, exacerbate or otherwise negatively impact the conflict or contribute to violations of international human rights law or international humanitarian law in conflict-affected or high-risk areas. |
Amendment 14
Proposal for a directive
Recital 17
| Text proposed by the Commission | Amendment |
|---|---|
| (17) Adverse human rights and environmental impact occur in companies’ own operations, subsidiaries, products, and in their value chains, in particular at the level of raw material sourcing, manufacturing, or at the level of product or waste disposal. In order for the due diligence to have a meaningful impact, it should cover human rights and environmental adverse impacts generated throughout the life-cycle of production and use and disposal of product or provision of services, at the level of own operations, subsidiaries and in value chains. | (17) Adverse human rights, labour rights and environmental, rule of law and good governance impacts occur in companies’ own operations, subsidiaries, products, and in their value chains, in particular at the level of raw material sourcing, manufacturing, or at the level of product or waste disposal. In order for the due diligence to have a meaningful impact, it should cover human rights, labour rights and environmental, rule of law and good governance adverse impacts generated throughout the life-cycle of production and use and disposal of product or provision of services, at the level of own operations, subsidiaries and in value chains. |
Amendment 15
Proposal for a directive
Recital 18
| Text proposed by the Commission | Amendment |
|---|---|
| (18) The value chain should cover activities related to the production of a good or provision of services by a company, including the development of the product or the service and the use and disposal of the product as well as the related activities of established business relationships of the company. It should encompass upstream established direct and indirect business relationships that design, extract, manufacture, transport, store and supply raw material, products, parts of products, or provide services to the company that are necessary to carry out the company’s activities, and also downstream relationships, including established direct and indirect business relationships, that use or receive products, parts of products or services from the company up to the end of life of the product, including inter alia the distribution of the product to retailers, the transport and storage of the product, dismantling of the product, its recycling, composting or landfilling. | (18) The value chain should cover activities related to the production, distribution and sale of a good or provision of services by a company, and any of its directly and indirectly-owned subsidiaries and branches including inter alia the development of the product or the service and the use and disposal of the product as well as the related activities of business relationships of the company. It should encompass upstream direct and indirect business relationships that design, extract, manufacture, transport, store and supply raw material, products, parts of products, or provide services to the company and any of its directly and indirectly-owned subsidiaries and branches that are necessary to carry out the company’s activities, and also downstream relationships, including direct and indirect business relationships, that use or receive products, parts of products or services from the company and any of its directly and indirectly-owned subsidiaries and branches up to the end of life of the product, including inter alia the distribution of the product to retailers, the sale of products or provision of services to consumers whatever the means (e.g. franchising, licensing), the transport and storage of the product, dismantling of the product, its recycling, composting or landfilling. As pointed out in the OECD Guidelines for Multinational Enterprises, the value chain should cover the various structures that the company and any of its directly and indirectly-owned subsidiaries and branches use to operate including inter alia franchising, licensing and subcontracting. |
Amendment 16
Proposal for a directive
Recital 19
| Text proposed by the Commission | Amendment |
|---|---|
| (19) As regards regulated financial undertakings providing loan, credit, or other financial services, “value chain” with respect to the provision of such services should be limited to the activities of the clients receiving such services, and the subsidiaries thereof whose activities are linked to the contract in question. Clients that are households and natural persons not acting in a professional or business capacity, as well as small and medium sized undertakings, should not be considered to be part of the value chain. The activities of the companies or other legal entities that are included in the value chain of that client should not be covered. | (19) As regards regulated financial undertakings providing financing (loans and other forms of credit), insurance or reinsurance, “value chain” with respect to the provision of such services should be limited to the activities of the clients receiving such services, and the subsidiaries thereof whose activities are linked to the contract in question. |
Amendment 17
Proposal for a directive
Recital 20
| Text proposed by the Commission | Amendment |
|---|---|
| (20) In order to allow companies to properly identify the adverse impacts in their value chain and to make it possible for them to exercise appropriate leverage, the due diligence obligations should be limited in this Directive to established business relationships. For the purpose of this Directive, established business relationships should mean such direct and indirect business relationships which are, or which are expected to be lasting, in view of their intensity and duration and which do not represent a negligible or ancillary part of the value chain. The nature of business relationships as “established” should be reassessed periodically, and at least every 12 months. If the direct business relationship of a company is established, then all linked indirect business relationships should also be considered as established regarding that company. | (20) In order to allow companies to properly identify the adverse impacts in their value chain and to make it possible for them to exercise appropriate leverage, the due diligence obligations should cover all business relationships. For the purpose of this Directive, business relationships should mean direct and indirect business relationships. |
Amendment 18
Proposal for a directive
Recital 21
| Text proposed by the Commission | Amendment |
|---|---|
| (21) Under this Directive, EU companies with more than 500 employees on average and a worldwide net turnover exceeding EUR 150 million in the financial year preceding the last financial year should be required to comply with due diligence. As regards companies which do not fulfil those criteria, but which had more than 250 employees on average and more than EUR 40 million worldwide net turnover in the financial year preceding the last financial year and which operate in one or more high-impact sectors, due diligence should apply 2 years after the end of the transposition period of this directive, in order to provide for a longer adaptation period. In order to ensure a proportionate burden, companies operating in such high-impact sectors should be required to comply with more targeted due diligence focusing on severe adverse impacts. Temporary agency workers, including those posted under Article 1(3), point (c), of Directive 96/71/EC, as amended by Directive 2018/957/EU of the European Parliament and of the Council103, should be included in the calculation of the number of employees in the user company. Posted workers under Article 1(3), points (a) and (b), of Directive 96/71/EC, as amended by Directive 2018/957/EU, should only be included in the calculation of the number of employees of the sending company. | (21) Under this Directive, EU companies with more than 250 employees on average and a worldwide net turnover exceeding EUR 40 million in the financial year preceding the last financial year should be required to comply with due diligence. As regards companies which do not fulfil those criteria but which had more than 50 employees on average and more than EUR 8 million worldwide net turnover in the financial year preceding the last financial year and which operate in one or more high-impact sectors, due diligence should apply 2 years after the end of the transposition period of this directive, in order to provide for a longer adaptation period. In order to ensure a proportionate burden, companies operating in such high-impact sectors should be required to comply with more targeted due diligence focusing on severe adverse impacts. Temporary agency workers, including those posted under Article 1(3), point (c), of Directive 96/71/EC, as amended by Directive 2018/957/EU of the European Parliament and of the Council103, should be included in the calculation of the number of employees in the user company. Posted workers under Article 1(3), points (a) and (b), of Directive 96/71/EC, as amended by Directive 2018/957/EU, should only be included in the calculation of the number of employees of the sending company. |
| 103 Directive (EU) 2018/957 of the European Parliament and of the Council of 28 June 2018 amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services (OJ L 173, 9.7.2018, p. 16). | 103 Directive (EU) 2018/957 of the European Parliament and of the Council of 28 June 2018 amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services (OJ L 173, 9.7.2018, p. 16). |
Amendment 19
Proposal for a directive
Recital 22
| Text proposed by the Commission | Amendment |
|---|---|
| (22) In order to reflect the priority areas of international action aimed at tackling human rights and environmental issues, the selection of high-impact sectors for the purposes of this Directive should be based on existing sectoral OECD due diligence guidance. The following sectors should be regarded as high-impact for the purposes of this Directive: the manufacture of textiles, leather and related products (including footwear), and the wholesale trade of textiles, clothing and footwear; agriculture, forestry, fisheries (including aquaculture), the manufacture of food products, and the wholesale trade of agricultural raw materials, live animals, wood, food, and beverages; the extraction of mineral resources regardless of where they are extracted from (including crude petroleum, natural gas, coal, lignite, metals and metal ores, as well as all other, non-metallic minerals and quarry products), the manufacture of basic metal products, other non-metallic mineral products and fabricated metal products (except machinery and equipment), and the wholesale trade of mineral resources, basic and intermediate mineral products (including metals and metal ores, construction materials, fuels, chemicals and other intermediate products). As regards the financial sector, due to its specificities, in particular as regards the value chain and the services offered, even if it is covered by sector-specific OECD guidance, it should not form part of the high-impact sectors covered by this Directive. At the same time, in this sector, the broader coverage of actual and potential adverse impacts should be ensured by also including very large companies in the scope that are regulated financial undertakings, even if they do not have a legal form with limited liability. | (22) In order to reflect the priority areas of international action aimed at tackling human and labour rights, environmental, rule of law and good governance issues, this Directive should provide a list of high-impact sectors based, among others, on existing sectoral OECD due diligence guidance. The sectors that should be regarded as high-impact for the purposes of this Directive include: the energy sector including oil, gas, nuclear, steam, electricity and other sources throughout their life cycle, from extraction, refining, production, combustion of fuels, in transportation, storage and waste management including radioactive waste; the chemicals sector; manufacture of textiles, apparel, fur, leather and related products (including footwear), the wholesale trade and retail of textiles, clothing and footwear; plastic production, waste shipment and management ; agriculture, forestry, fisheries (including aquaculture), the management of land and resources (including in relation to nature conservation or other related activities); the manufacture of food products, and the wholesale trade of agricultural raw materials, live animals, animal products, wood, food, and beverages and sale to consumers; extraction, transport, processing, refining and handling of mineral resources regardless of where they are extracted from (including crude petroleum, natural gas, coal, lignite, metals and metal ores, as well as all other, non-metallic minerals and quarry products), the manufacture of basic metal products, other non-metallic mineral products and fabricated metal products (except machinery and equipment), and the wholesale trade of mineral resources, basic and intermediate mineral products (including metals and metal ores, construction materials, fuels, chemicals and other intermediate products); construction, logistics and infrastructure building; transportation sector, logistics and storage; the production, use and waste management of electronic products; waste management sector; financial and insurance activities; technology, digital activities and online platforms; manufacture and trade of weapons and ammunition, including dual-use items, manufacture and trade of military fighting vehicles; private security activities and security systems service activities, including the development and operation of biometrics and surveillance technologies. |
Amendment 20
Proposal for a directive
Recital 23
| Text proposed by the Commission | Amendment |
|---|---|
| (23) In order to achieve fully the objectives of this Directive addressing human rights and adverse environmental impacts with respect to companies’ operations, subsidiaries and value chains, third-country companies with significant operations in the EU should also be covered. More specifically, the Directive should apply to third-country companies which generated a net turnover of at least EUR 150 million in the Union in the financial year preceding the last financial year or a net turnover of more than EUR 40 million but less than EUR 150 million in the financial year preceding the last financial year in one or more of the high-impact sectors, as of 2 years after the end of the transposition period of this Directive. | (23) In order to achieve fully the objectives of this Directive addressing adverse human and labour rights environmental, rule of law and good governance impacts with respect to companies’ operations, subsidiaries and value chains, third-country companies with significant operations in the EU should also be covered. More specifically, the Directive should apply to third-country companies which generated a net turnover of at least EUR 40 million in the Union in the financial year preceding the last financial year or a net turnover of more than EUR 8 million but less than EUR 40 million in the financial year preceding the last financial year in one or more of the high-impact sectors, as of 2 years after the end of the transposition period of this Directive. Business enterprises could have various structures resulting in a single company having a net turnover below the threshold. As mentioned in the Interpretative Guide to the United Nations Guiding Principles on Business and Human Rights, companies could operate inter alia through various subsidiaries or follow a franchise model. Companies could also outsource or subcontract significant parts of their activities. Therefore, net turnover generated by the company in the Union should include net turnover generated directly in the Union by the company and the net turnover generated in the Union by its directly and indirectly-owned subsidiaries and branches, as well as the net turnover generated in the Union through third party undertakings with whom the company or its directly and indirectly-owned subsidiaries and branches have entered into a vertical agreement in return for payment of royalties or an outsourcing agreement. |
Amendment 21
Proposal for a directive
Recital 24
| Text proposed by the Commission | Amendment |
|---|---|
| (24) For defining the scope of application in relation to non-EU companies the described turnover criterion should be chosen as it creates a territorial connection between the third-country companies and the Union territory. Turnover is a proxy for the effects that the activities of those companies could have on the internal market. In accordance with international law, such effects justify the application of Union law to third-country companies. To ensure identification of the relevant turnover of companies concerned, the methods for calculating net turnover for non-EU companies as laid down in Directive (EU) 2013/34 as amended by Directive (EU) 2021/2101 should be used. To ensure effective enforcement of this Directive, an employee threshold should, in turn, not be applied to determine which third-country companies fall under this Directive, as the notion of “employees” retained for the purposes of this Directive is based on Union law and could not be easily transposed outside of the Union. In the absence of a clear and consistent methodology, including in accounting frameworks, to determine the employees of third-country companies, such employee threshold would therefore create legal uncertainty and would be difficult to apply for supervisory authorities. The definition of turnover should be based on Directive 2013/34/EU which has already established the methods for calculating net turnover for non-Union companies, as turnover and revenue definitions are similar in international accounting frameworks too. With a view to ensuring that the supervisory authority knows which third country companies generate the required turnover in the Union to fall under the scope of this Directive, this Directive should require that a supervisory authority in the Member State where the third country company’s authorised representative is domiciled or established and, where it is different, a supervisory authority in the Member State in which the company generated most of its net turnover in the Union in the financial year preceding the last financial year are informed that the company is a company falling under the scope of this Directive. | (24) For defining the scope of application in relation to non-EU companies the described turnover criterion should be chosen as it creates a territorial connection between the third-country companies and the Union territory Turnover is a proxy for the effects that the activities of those companies could have on the internal market. In accordance with international law, such effects justify the application of Union law to third-country companies. To ensure identification of the relevant turnover of companies concerned, the methods for calculating net turnover for non-EU companies as laid down in Directive (EU) 2013/34 as amended by Directive (EU) 2021/2101 should be used. To ensure effective enforcement of this Directive, an employee threshold should, in turn, not be applied to determine which third-country companies fall under this Directive, as the notion of “employees” retained for the purposes of this Directive is based on Union law and could not be easily transposed outside of the Union. In the absence of a clear and consistent methodology, including in accounting frameworks, to determine the employees of third-country companies, such employee threshold would therefore create legal uncertainty and would be difficult to apply for supervisory authorities. The definition of turnover should be based on Directive 2013/34/EU which has already established the methods for calculating net turnover for non-Union companies, as turnover and revenue definitions are similar in international accounting frameworks too. Third-country companies should be considered as generating net turnover in the Union even if they do not operate directly in the Union but through various structures including inter alia subsidiaries and branches and vertical agreements in return for payment of royalties - as pointed out in the Interpretative Guide of the United Nations Guiding Principles on Business and Human Rights – as well as outsourcing agreements or subcontracting agreements. With a view to ensuring that the supervisory authority knows which third country companies generate the required turnover in the Union to fall under the scope of this Directive, this Directive should require that a supervisory authority in the Member State where the third country company’s authorised representative is domiciled or established and, where it is different, a supervisory authority in the Member State in which the company generated most of its net turnover in the Union in the financial year preceding the last financial year are informed that the company is a company falling under the scope of this Directive. |
Amendment 22
Proposal for a directive
Recital 25
| Text proposed by the Commission | Amendment |
|---|---|
| (25) In order to achieve a meaningful contribution to the sustainability transition, due diligence under this Directive should be carried out with respect to adverse human rights impact on protected persons resulting from the violation of one of the rights and prohibitions as enshrined in the international conventions as listed in the Annex to this Directive. In order to ensure a comprehensive coverage of human rights, a violation of a prohibition or right not specifically listed in that Annex which directly impairs a legal interest protected in those conventions should also form part of the adverse human rights impact covered by this Directive, provided that the company concerned could have reasonably established the risk of such impairment and any appropriate measures to be taken in order to comply with the due diligence obligations under this Directive, taking into account all relevant circumstances of their operations, such as the sector and operational context. Due diligence should further encompass adverse environmental impacts resulting from the violation of one of the prohibitions and obligations pursuant to the international environmental conventions listed in the Annex to this Directive. | (25) In order to achieve a meaningful contribution to the sustainability transition, due diligence under this Directive should avoid any negative impact on the enjoyment of human and labour rights of a person or group of persons, as enshrined in international conventions and should be carried out with respect to adverse human rights impact on protected persons resulting from the violation of one of the rights and prohibitions as enshrined in the international conventions as listed in the Annex to this Directive or from failure of having established appropriate anti-corruption due diligence measures. In order to ensure a comprehensive coverage of human and labour rights, a violation of a prohibition or right not specifically listed in that Annex which directly impairs a legal interest protected in those conventions should also form part of the adverse human rights or labour rights impact covered by this Directive. Due diligence should further encompass adverse environmental impacts resulting from the violation of one of the prohibitions and obligations established under Union and international environmental law including but not limited to the international environmental conventions listed in the Annex to this Directive, or from failure of having established appropriate anti-corruption due diligence measures or in particular, adverse impacts on air quality, air pollution and atmosphere, water pollution, water contamination, access to water and depletion of freshwater, soil, such as soil pollution, soil contamination, soil erosion, and land degradation, biodiversity, including damage to wildlife, seabed and marine environment, flora, fauna, natural habitats and ecosystems, human health in accordance with the 'One Health' approach, climate, including through greenhouse gas emissions and the destruction or degradation of sinks. |
Amendment 23
Proposal for a directive
Recital 25 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (25a) Companies’ behaviour could have negative impact on rule of law and good governance systems, in particular in developing countries. They could take advantage of the existing weaknesses in the institutional and legal systems to do business by violating existing international or regional legal frameworks, in particular when rules are not respected, including the non-payment of their taxes, when their democratic, legislative executive, administrative or judicial processes are influenced using corrupted practices, violence or intimidation or when companies are directly or indirectly involved in criminal activities with the serious consequences that that entails for those countries and their communities. Corruption and insufficient rule of law greatly undermine respect for human rights and the environment. Corruption enables companies to avoid responsibility for their impact on human rights and the environment, endangers human rights and environmental and rule of law and good governance defenders, weakens the quality, frequency and trust for enforcement activities of public authorities (e.g. labour inspection and environmental authorities) and for judicial proceedings. |
Amendment 24
Proposal for a directive
Recital 27
| Text proposed by the Commission | Amendment |
|---|---|
| (27) In order to conduct appropriate human rights, and environmental due diligence with respect to their operations, their subsidiaries, and their value chains, companies covered by this Directive should integrate due diligence into corporate policies, identify, prevent and mitigate as well as bring to an end and minimise the extent of potential and actual adverse human rights and environmental impacts, establish and maintain a complaints procedure, monitor the effectiveness of the taken measures in accordance with the requirements that are set up in this Directive and communicate publicly on their due diligence. In order to ensure clarity for companies, in particular the steps of preventing and mitigating potential adverse impacts and of bringing to an end, or when this is not possible, minimising actual adverse impacts should be clearly distinguished in this Directive. | (27) In order to conduct appropriate human rights, labour rights, environmental, rule of law and good governance due diligence with respect to their operations, produced goods and services throughout their life-cycle, and those of their subsidiaries, and their value chains, companies covered by this Directive should, after meaningful consultation with stakeholders, integrate due diligence into corporate policies, identify, prevent and mitigate as well as bring to an end and minimise the extent of potential and actual adverse human rights, environmental, rule of law and good governance impacts, establish and maintain a grievance mechanism, monitor and assess the effectiveness of the taken measures in accordance with the requirements that are set up in this Directive and report on their due diligence and related information in order to support companies, their subsidiaries and business partners operating in developing countries to identify, prevent and effectively address actual or potential adverse impacts on human rights, labour rights, the environment, and the rule of law and good governance systems. In order to ensure clarity for companies, in particular the steps of preventing and mitigating potential adverse impacts and of bringing to an end, or when this is not possible, minimising and providing for remediation of actual adverse impacts should be clearly distinguished in this Directive. |
Amendment 25
Proposal for a directive
Recital 28
| Text proposed by the Commission | Amendment |
|---|---|
| (28) In order to ensure that due diligence forms part of companies’ corporate policies, and in line with the relevant international framework, companies should integrate due diligence into all their corporate policies and have in place a due diligence policy. The due diligence policy should contain a description of the company’s approach, including in the long term, to due diligence, a code of conduct describing the rules and principles to be followed by the company’s employees and subsidiaries; a description of the processes put in place to implement due diligence, including the measures taken to verify compliance with the code of conduct and to extend its application to established business relationships. The code of conduct should apply in all relevant corporate functions and operations, including procurement and purchasing decisions. Companies should also update their due diligence policy annually. | (28) In order to ensure that due diligence forms part of companies’ corporate policies, and in line with the relevant international framework, companies should integrate due diligence into all their corporate policies and have in place a due diligence policy. The due diligence policy should contain a description of the company’s approach, including in the long term, to due diligence, a code of conduct describing the rules and principles to be followed by the company’s employees, subsidiaries and entities with whom the company or any of its subsidiaries have business relationships; a description of the processes put in place to implement due diligence; a description of the measures aimed at preventing and mitigating potential adverse impacts, and bringing actual adverse impacts to an end and minimising their extent; a description of the corrective measures taken over the preceding year following any allegation of violation of the code of conduct and any new adverse impact; a description of the grievance mechanisms provided in this Directive; a description of the results of the assessments of the processes, measures and procedures. The code of conduct should apply in all relevant corporate functions and operations, including procurement and purchasing decisions. Companies must put in place adequate policies to avoid passing on the costs of the due diligence process to business partners in a weaker position. The due diligence policy should notably include a strategy of co-investment to build the capacity of weaker business partners to carry out due diligence. Companies should also update their due diligence policy annually. |
Amendment 26
Proposal for a directive
Recital 29
| Text proposed by the Commission | Amendment |
|---|---|
| (29) To comply with due diligence obligations, companies need to take appropriate measures with respect to identification, prevention and bringing to an end adverse impacts. An ‘appropriate measure’ should mean a measure that is capable of achieving the objectives of due diligence, commensurate with the degree of severity and the likelihood of the adverse impact, and reasonably available to the company, taking into account the circumstances of the specific case, including characteristics of the economic sector and of the specific business relationship and the company’s influence thereof, and the need to ensure prioritisation of action. In this context, in line with international frameworks, the company’s influence over a business relationship should include, on the one hand its ability to persuade the business relationship to take action to bring to an end or prevent adverse impacts (for example through ownership or factual control, market power, pre-qualification requirements, linking business incentives to human rights and environmental performance, etc.) and, on the other hand, the degree of influence or leverage that the company could reasonably exercise, for example through cooperation with the business partner in question or engagement with another company which is the direct business partner of the business relationship associated with adverse impact. | (29) To comply with due diligence obligations, companies need to take appropriate measures with respect to identification, prevention and bringing to an end adverse impacts. An ‘appropriate measure’ should mean a measure that is capable of achieving the objectives of due diligence, commensurate with the degree of severity and the likelihood of the adverse impact, and reasonably available to the company, taking into account the circumstances of the specific case, including characteristics of the economic sector and of the specific business relationship and the company’s influence thereof, and the need to ensure prioritisation of action. In this context, in line with international frameworks, the company’s influence over a business relationship should include, on the one hand its ability to persuade the business relationship to take action to bring to an end or prevent adverse impacts (for example through ownership or factual control, market power, pre-qualification requirements, linking business incentives to human rights, environmental, rule of law and good governance performance, etc.) and, on the other hand, the degree of influence or leverage that the company could reasonably exercise, for example through cooperation with the business partner in question or engagement with another company which is the direct business partner of the business relationship associated with adverse impact. |
Amendment 27
Proposal for a directive
Recital 30
| Text proposed by the Commission | Amendment |
|---|---|
| (30) Under the due diligence obligations set out by this Directive, a company should identify actual or potential adverse human rights and environmental impacts. In order to allow for a comprehensive identification of adverse impacts, such identification should be based on quantitative and qualitative information. For instance, as regards adverse environmental impacts, the company should obtain information about baseline conditions at higher risk sites or facilities in value chains. Identification of adverse impacts should include assessing the human rights, and environmental context in a dynamic way and in regular intervals: prior to a new activity or relationship, prior to major decisions or changes in the operation; in response to or anticipation of changes in the operating environment; and periodically, at least every 12 months, throughout the life of an activity or relationship. Regulated financial undertakings providing loan, credit, or other financial services should identify the adverse impacts only at the inception of the contract. When identifying adverse impacts, companies should also identify and assess the impact of a business relationship’s business model and strategies, including trading, procurement and pricing practices. Where the company cannot prevent, bring to an end or minimize all its adverse impacts at the same time, it should be able to prioritize its action, provided it takes the measures reasonably available to the company, taking into account the specific circumstances. | (30) Under the due diligence obligations set out by this Directive, a company should identify actual or potential adverse human rights, labour rights, environmental, and rule of law and good governance impacts. In order to allow for a comprehensive identification of adverse impacts, such identification should be based on information received after meaningful stakeholder engagement as well as on additional quantitative and qualitative data. For instance, as regards adverse environmental impacts, the company should obtain information about baseline conditions at higher risk sites or facilities in value chains. Identification of adverse impacts should include assessing the human rights, labour rights, and environmental, rule of law and good governance context in a dynamic way and in regular intervals: prior to a new activity or relationship, prior to major decisions or changes in the operation; in response to or anticipation of changes in the operating context and periodically, at least every 12 months, throughout the life of an activity or relationship. There should be appropriate guidance to ensure that regulated financial undertakings providing loan, credit, or other financial services can appropriately identify the adverse impacts at the inception of the contract as part of the on-boarding processes for new relevant clients and subject to an annual update. When identifying adverse impacts, companies should also identify and assess the impact of a business relationship’s business model and strategies, including trading, procurement and pricing practices. Where the company cannot prevent, bring to an end or minimize all its adverse impacts at the same time, it should be able to prioritize its action, provided it takes the measures reasonably available to the company, taking into account the specific circumstances. In order to do so effectively the company should develop and implement a prioritisation strategy in consultation with stakeholders, which shall take into account the level of severity, likelihood, the duration, the spread and reversibility of the different potential adverse impacts on human rights, labour rights, the environment and on the rule of law and good governance systems. |
Amendment 28
Proposal for a directive
Recital 31
| Text proposed by the Commission | Amendment |
|---|---|
| (31) In order to avoid undue burden on the smaller companies operating in high-impact sectors which are covered by this Directive, those companies should only be obliged to identify those actual or potential severe adverse impacts that are relevant to the respective sector. | (31) In order to avoid undue burden on small and medium sized enterprises (SMEs), those enterprises should be supported with adequate and targeted measures and tools. |
Amendment 29
Proposal for a directive
Recital 32
| Text proposed by the Commission | Amendment |
|---|---|
| (32) In line with international standards, prevention and mitigation as well as bringing to an end and minimisation of adverse impacts should take into account the interests of those adversely impacted. In order to enable continuous engagement with the value chain business partner instead of termination of business relations (disengagement) and possibly exacerbating adverse impacts, this Directive should ensure that disengagement is a last-resort action, in line with the Union`s policy of zero-tolerance on child labour. Terminating a business relationship in which child labour was found could expose the child to even more severe adverse human rights impacts. This should therefore be taken into account when deciding on the appropriate action to take. | (32) In line with international standards, prevention, mitigation and remediation as well as bringing to an end and minimisation of adverse impacts should fully take into account the interests, the needs and circumstances of those adversely impacted and should be designed and determined on the basis of meaningful engagement with them. Companies should engage in a timely, accessible, efficient and meaningful manner with stakeholders impacted by the decision to suspend or terminate the adverse impacts before reaching that decision, and should address the adverse impacts derived from those actions. In line with the Union’s policy of zero-tolerance on child labour, the companies should disengage from business relations that exploit in any form child labour as defined in the ILO Convention No. 182. The company should do so in a responsible manner and as a last resort, once the measures implemented to end child labour have failed. |
Amendment 30
Proposal for a directive
Recital 33
| Text proposed by the Commission | Amendment |
|---|---|
| (33) Under the due diligence obligations set out by this Directive, if a company identifies potential adverse human rights or environmental impacts, it should take appropriate measures to prevent and adequately mitigate them. To provide companies with legal clarity and certainty, this Directive should set out the actions companies should be expected to take for prevention and mitigation of potential adverse impacts where relevant depending on the circumstances. | (33) Under the due diligence obligations set out by this Directive, if a company identifies potential adverse human rights, labour rights, environmental, rule of law and good governance impacts, it should take appropriate measures to prevent and adequately mitigate them. To provide companies with legal clarity and certainty, this Directive should set out the actions companies should be expected to take for prevention and mitigation of potential adverse impacts where relevant depending on the circumstances. |
Amendment 31
Proposal for a directive
Recital 34
| Text proposed by the Commission | Amendment |
|---|---|
| (34) So as to comply with the prevention and mitigation obligation under this Directive, companies should be required to take the following actions, where relevant. Where necessary due to the complexity of prevention measures, companies should develop and implement a prevention action plan. Companies should seek to obtain contractual assurances from a direct partner with whom they have an established business relationship that it will ensure compliance with the code of conduct or the prevention action plan, including by seeking corresponding contractual assurances from its partners to the extent that their activities are part of the companies’ value chain. The contractual assurances should be accompanied by appropriate measures to verify compliance. To ensure comprehensive prevention of actual and potential adverse impacts, companies should also make investments which aim to prevent adverse impacts, provide targeted and proportionate support for an SME with which they have an established business relationship such as financing, for example, through direct financing, low-interest loans, guarantees of continued sourcing, and assistance in securing financing, to help implement the code of conduct or prevention action plan, or technical guidance such as in the form of training, management systems upgrading, and collaborate with other companies. | (34) So as to comply with the prevention and mitigation obligation under this Directive, companies should be required to take the following actions. Companies should develop and implement a prevention action plan. Companies should obtain contractual assurances from a direct partner with whom they have a business relationship that it will ensure compliance with the code of conduct or the prevention action plan, including by obtaining corresponding contractual assurances from its partners to the extent that their activities are part of the companies’ value chain. The contractual assurances should be accompanied by appropriate measures to verify compliance. To ensure comprehensive prevention of actual and potential adverse impacts, companies should also adapt their business models and strategies, including trading, procurement, purchasing and pricing practices, and make investments which aim to prevent adverse impacts, provide targeted and proportionate support for an SME with which they have a business relationship such as financing, for example, through direct financing, low-interest loans, guarantees of continued sourcing, and assistance in securing financing, to help implement the code of conduct or prevention action plan, or technical guidance such as in the form of training, management systems upgrading, and collaborate with other companies. |
Amendment 32
Proposal for a directive
Recital 35
| Text proposed by the Commission | Amendment |
|---|---|
| (35) In order to reflect the full range of options for the company in cases where potential impacts could not be addressed by the described prevention or minimisation measures, this Directive should also refer to the possibility for the company to seek to conclude a contract with the indirect business partner, with a view to achieving compliance with the company’s code of conduct or a prevention action plan, and conduct appropriate measures to verify compliance of the indirect business relationship with the contract. | (35) In order to reflect the full range of options for the company in cases where potential impacts could not be addressed by the described prevention or minimisation measures, this Directive should also refer to the requirement for the company to seek to conclude a contract with the indirect business partner, with a view to achieving compliance with the company’s code of conduct or a prevention action plan, and conduct appropriate measures to verify compliance of the indirect business relationship with the contract. |
Amendment 33
Proposal for a directive
Recital 36
| Text proposed by the Commission | Amendment |
|---|---|
| (36) In order to ensure that prevention and mitigation of potential adverse impacts is effective, companies should prioritize engagement with business relationships in the value chain, instead of terminating the business relationship, as a last resort action after attempting at preventing and mitigating adverse potential impacts without success. However, the Directive should also, for cases where potential adverse impacts could not be addressed by the described prevention or mitigation measures, refer to the obligation for companies to refrain from entering into new or extending existing relations with the partner in question and, where the law governing their relations so entitles them to, to either temporarily suspend commercial relationships with the partner in question, while pursuing prevention and minimisation efforts, if there is reasonable expectation that these efforts are to succeed in the short-term; or to terminate the business relationship with respect to the activities concerned if the potential adverse impact is severe. In order to allow companies to fulfil that obligation, Member States should provide for the availability of an option to terminate the business relationship in contracts governed by their laws. It is possible that prevention of adverse impacts at the level of indirect business relationships requires collaboration with another company, for example a company which has a direct contractual relationship with the supplier. In some instances, such collaboration could be the only realistic way of preventing adverse impacts, in particular, where the indirect business relationship is not ready to enter into a contract with the company. In these instances, the company should collaborate with the entity which can most effectively prevent or mitigate adverse impacts at the level of the indirect business relationship while respecting competition law. | (36) In order to ensure that prevention and mitigation of potential adverse impacts is effective, companies should prioritize engagement with business relationships in the value chain, instead of terminating the business relationship, as a last resort action after attempting at preventing and mitigating adverse potential impacts without success. However, the Directive should also, for cases where potential adverse impacts could not be addressed by the described prevention or mitigation measures, refer to the obligation for companies to refrain from entering into new or extending existing relations with the partner in question and to either temporarily suspend commercial relationships with the partner in question, while pursuing prevention, and minimisation and remediation efforts where appropriate, if there is reasonable expectation that these efforts are to succeed in accordance with a joint time-bound plan; or to terminate the business relationship with respect to the activities concerned if the potential adverse impact is severe or if the adverse impact is repeated. Companies should engage meaningfully with stakeholders impacted by the decision to disengage before reaching this decision, and should address the adverse impacts related to the decision to disengage and pursue remediation of past adverse impacts where appropriate. In order to allow companies to fulfil that obligation, Member States should provide for the availability of an option to terminate the business relationship in contracts governed by their laws. It is possible that prevention of adverse impacts at the level of indirect business relationships requires collaboration with another company, for example a company which has a direct contractual relationship with the supplier. In some instances, such collaboration could be the only realistic way of preventing adverse impacts, in particular, where the indirect business relationship is not ready to enter into a contract with the company. In these instances, the company should collaborate with the entity which can most effectively prevent or mitigate adverse impacts at the level of the indirect business relationship while respecting competition law. |
Amendment 34
Proposal for a directive
Recital 37
| Text proposed by the Commission | Amendment |
|---|---|
| (37) As regards direct and indirect business relationships, industry cooperation, industry schemes and multi-stakeholder initiatives can help create additional leverage to identify, mitigate, and prevent adverse impacts. Therefore it should be possible for companies to rely on such initiatives to support the implementation of their due diligence obligations laid down in this Directive to the extent that such schemes and initiatives are appropriate to support the fulfilment of those obligations. Companies could assess, at their own initiative, the alignment of these schemes and initiatives with the obligations under this Directive. In order to ensure full information on such initiatives, the Directive should also refer to the possibility for the Commission and the Member States to facilitate the dissemination of information on such schemes or initiatives and their outcomes. The Commission, in collaboration with Member States, may issue guidance for assessing the fitness of industry schemes and multi-stakeholder initiatives. | (37) As regards direct and indirect business relationships, industry cooperation, industry schemes and multi-stakeholder initiatives can help create additional leverage to identify, mitigate, and prevent adverse impacts. Therefore it should be possible for companies to rely on such initiatives to support the implementation of their due diligence obligations laid down in this Directive to the extent that such schemes and initiatives are appropriate to support the fulfilment of those obligations. Companies could assess, at their own initiative, the alignment of these schemes and initiatives with the obligations under this Directive. The mere compliance with industry schemes and multi-stakeholder initiatives should not relieve any company from its obligations and liability for breaches of due diligence obligations laid down in this Directive. In order to ensure full information on such initiatives, the Directive should also refer to the possibility for the Commission and the Member States to facilitate the dissemination of information on such schemes or initiatives and their outcomes. The Commission, in collaboration with Member States, may issue guidance for assessing the fitness of industry schemes and multi-stakeholder initiatives. |
Amendment 35
Proposal for a directive
Recital 38
| Text proposed by the Commission | Amendment |
|---|---|
| (38) Under the due diligence obligations set out by this Directive, if a company identifies actual human rights or environmental adverse impacts, it should take appropriate measures to bring those to an end. It can be expected that a company is able to bring to an end actual adverse impacts in their own operations and in subsidiaries. However, it should be clarified that, as regards established business relationships, where adverse impacts cannot be brought to an end, companies should minimise the extent of such impacts. Minimisation of the extent of adverse impacts should require an outcome that is the closest possible to bringing the adverse impact to an end. To provide companies with legal clarity and certainty, this Directive should define which actions companies should be required to take for bringing actual human rights and environmental adverse impacts to an end and minimisation of their extent, where relevant depending on the circumstances. | (38) Under the due diligence obligations set out by this Directive, if a company identifies actual adverse human rights, labour rights, environmental, rule of law and good governance impacts, it should take appropriate measures to bring those to an end. It can be expected that a company is able to bring to an end actual adverse impacts in their own operations and in subsidiaries and to require partners to do so. However, it should be clarified that, as regards business relationships, where adverse impacts cannot be brought to an end, companies should minimise such impacts, to the greatest extent possible. Minimisation of the extent of adverse impacts should require an outcome that is the closest possible to bringing the adverse impact to an end. To provide companies with legal clarity and certainty, this Directive should define which actions companies should be required to take for bringing actual adverse human rights, labour rights, environmental, rule of law and good governance impacts to an end and minimisation of their extent, where relevant depending on the circumstances. |
Amendment 36
Proposal for a directive
Recital 39
| Text proposed by the Commission | Amendment |
|---|---|
| (39) So as to comply with the obligation of bringing to an end and minimising the extent of actual adverse impacts under this Directive, companies should be required to take the following actions, where relevant. They should neutralise the adverse impact or minimise its extent, with an action proportionate to the significance and scale of the adverse impact and to the contribution of the company’s conduct to the adverse impact. Where necessary due to the fact that the adverse impact cannot be immediately brought to an end, companies should develop and implement a corrective action plan with reasonable and clearly defined timelines for action and qualitative and quantitative indicators for measuring improvement. Companies should also seek to obtain contractual assurances from a direct business partner with whom they have an established business relationship that they will ensure compliance with the company’s code of conduct and, as necessary, a prevention action plan, including by seeking corresponding contractual assurances from its partners, to the extent that their activities are part of the company’s value chain. The contractual assurances should be accompanied by the appropriate measures to verify compliance. Finally, companies should also make investments aiming at ceasing or minimising the extent of adverse impact, provide targeted and proportionate support for an SMEs with which they have an established business relationship and collaborate with other entities, including, where relevant, to increase the company’s ability to bring the adverse impact to an end. | (39) So as to comply with the obligation of bringing to an end and minimising the extent of actual adverse impacts under this Directive, companies should be required to take the following actions, where relevant. They should neutralise the adverse impact or minimise it to the greatest extent possible, with an action proportionate to the significance and scale of the adverse impact. Where necessary due to the fact that the adverse impact cannot be immediately brought to an end, companies should develop and implement a corrective action plan with reasonable and clearly defined timelines for action and qualitative and quantitative indicators for measuring improvement. Companies should also obtain contractual assurances from a direct business partner with whom they have a business relationship that they will ensure compliance with the company’s code of conduct and, as necessary, a prevention action plan, including by obtaining corresponding contractual assurances from its partners, to the extent that their activities are part of the company’s value chain. The contractual assurances should be accompanied by the appropriate measures to verify compliance. Finally, companies should also make investments aiming at ceasing or minimising the adverse impact to the greatest extent possible, provide targeted and proportionate support for an SMEs with which they have an established business relationship and collaborate with other entities, including to increase the company’s ability to bring the adverse impact to an end. |
Amendment 37
Proposal for a directive
Recital 40
| Text proposed by the Commission | Amendment |
|---|---|
| (40) In order to reflect the full range of options for the company in cases where actual impacts could not be addressed by the described measures, this Directive should also refer to the possibility for the company to seek to conclude a contract with the indirect business partner, with a view to achieving compliance with the company’s code of conduct or a corrective action plan, and conduct appropriate measures to verify compliance of the indirect business relationship with the contract. | (40) In order to reflect the full range of options for the company in cases where actual impacts could not be addressed by the described measures, this Directive should also refer to the possible requirement for the company to seek to conclude a contract with the indirect business partner, with a view to achieving compliance with the company’s code of conduct or a corrective action plan, and conduct appropriate measures to verify compliance of the indirect business relationship with the contract. |
Amendment 38
Proposal for a directive
Recital 41
| Text proposed by the Commission | Amendment |
|---|---|
| (41) In order to ensure that bringing actual adverse impacts to an end or minimising them is effective, companies should prioritize engagement with business relationships in the value chain, instead of terminating the business relationship, as a last resort action after attempting at bringing actual adverse impacts to an end or minimising them without success. However, this Directive should also, for cases where actual adverse impacts could not be brought to an end or adequately mitigated by the described measures, refer to the obligation for companies to refrain from entering into new or extending existing relations with the partner in question and, where the law governing their relations so entitles them to, to either temporarily suspend commercial relationships with the partner in question, while pursuing efforts to bring to an end or minimise the extent of the adverse impact, or terminate the business relationship with respect to the activities concerned, if the adverse impact is considered severe. In order to allow companies to fulfil that obligation, Member States should provide for the availability of an option to terminate the business relationship in contracts governed by their laws. | (41) In order to ensure that bringing actual adverse impacts to an end or minimising them is effective, companies should prioritize engagement with business relationships in the value chain, instead of terminating the business relationship, as a last resort action after attempting at bringing actual adverse impacts to an end or minimising them without success. However, this Directive should also, for cases where actual adverse impacts could not be brought to an end or adequately mitigated by the described measures, refer to the obligation for companies to refrain from entering into new or extending existing relations with the partner in question and to either temporarily suspend commercial relationships with the partner in question, while pursuing efforts to bring to an end or minimise the extent of the adverse impact, or terminate the business relationship with respect to the activities concerned, if the adverse impact is considered severe or the adverse impact repeated. In order to allow companies to fulfil that obligation, Member States should provide for the availability of an option to terminate the business relationship in contracts governed by their laws. |
Amendment 39
Proposal for a directive
Recitals 42
| Text proposed by the Commission | Amendment |
|---|---|
| (42) Companies should provide the possibility for persons and organisations to submit complaints directly to them in case of legitimate concerns regarding actual or potential human rights and environmental adverse impacts. Organisations who could submit such complaints should include trade unions and other workers’ representatives representing individuals working in the value chain concerned and civil society organisations active in the areas related to the value chain concerned where they have knowledge about a potential or actual adverse impact. Companies should establish a procedure for dealing with those complaints and inform workers, trade unions and other workers’ representatives, where relevant, about such processes. Recourse to the complaints and remediation mechanism should not prevent the complainant from having recourse to judicial remedies. In accordance with international standards, complaints should be entitled to request from the company appropriate follow-up on the complaint and to meet with the company’s representatives at an appropriate level to discuss potential or actual severe adverse impacts that are the subject matter of the complaint. This access should not lead to unreasonable solicitations of companies. | (42) Companies should provide the possibility for persons, groups, communities, entities and organisations to submit grievances directly to them in case of legitimate concerns regarding actual or potential adverse human rights, labour rights, environmental, and rule of law and good governance impacts. Organisations who could submit such grievances should include trade unions and other workers’ representatives representing individuals working in the value chain concerned, civil society organisations and human rights, environmental and rule of law and good governance defenders or other natural persons or legal persons who have as a statutory purpose the defence of human rights, labour rights, the environment or rule of law and good governance. Companies should establish a procedure for dealing with those grievances and inform all relevant stakeholders, including workers, trade unions and other workers’ representatives about such processes. Recourse to the grievance and remediation mechanism should not prevent the complainant from having recourse to judicial remedies. In accordance with international standards, grievances should be entitled to request from the company appropriate follow-up on the grievance and to meet with the company’s representatives at an appropriate level to discuss potential or actual severe adverse impacts that are the subject matter of the grievance. |
Amendment 40
Proposal for a directive
Recital 43
| Text proposed by the Commission | Amendment |
|---|---|
| (43) Companies should monitor the implementation and effectiveness of their due diligence measures. They should carry out periodic assessments of their own operations, those of their subsidiaries and, where related to the value chains of the company, those of their established business relationships, to monitor the effectiveness of the identification, prevention, minimisation, bringing to an end and mitigation of human rights and environmental adverse impacts. Such assessments should verify that adverse impacts are properly identified, due diligence measures are implemented and adverse impacts have actually been prevented or brought to an end. In order to ensure that such assessments are up-to-date, they should be carried out at least every 12 months and be revised in-between if there are reasonable grounds to believe that significant new risks of adverse impact could have arisen. | (43) Companies should monitor the implementation and effectiveness of their due diligence measures. They should carry out, in consultation with stakeholders, periodic assessments of their own operations, those of their subsidiaries and, where related to the value chains of the company, those of their business relationships, to monitor the effectiveness of the identification, prevention, minimisation, bringing to an end and mitigation of adverse human rights, labour rights, environmental, rule of law and good governance impacts. Such assessments should verify that adverse impacts are properly identified, due diligence measures are implemented and adverse impacts have actually been prevented or brought to an end. In order to ensure that such assessments are up-to-date, they should be carried out at least every 12 months and be revised in-between if there are reasonable grounds to believe that significant new risks of adverse impact could have arisen. |
Amendment 41
Proposal for a directive
Recital 44
| Text proposed by the Commission | Amendment |
|---|---|
| (44) Like in the existing international standards set by the United Nations Guiding Principles on Business and Human Rights and the OECD framework, it forms part of the due diligence requirement to communicate externally relevant information on due diligence policies, processes and activities conducted to identify and address actual or potential adverse impacts, including the findings and outcomes of those activities. The proposal to amend Directive 2013/34/EU as regards corporate sustainability reporting sets out relevant reporting obligations for the companies covered by this directive. In order to avoid duplicating reporting obligations, this Directive should therefore not introduce any new reporting obligations in addition to those under Directive 2013/34/EU for the companies covered by that Directive as well as the reporting standards that should be developed under it. As regards companies that are within the scope of this Directive, but do not fall under Directive 2013/34/EU, in order to comply with their obligation of communicating as part of the due diligence under this Directive, they should publish on their website an annual statement in a language customary in the sphere of international business. | (44) Like in the existing international standards set by the United Nations Guiding Principles on Business and Human Rights and the OECD framework, it forms part of the due diligence requirement to communicate externally relevant information on due diligence policies, processes and activities conducted to identify and address actual or potential adverse impacts, including the findings and outcomes of those activities. The proposal to amend Directive 2013/34/EU as regards corporate sustainability reporting sets out relevant reporting obligations for the companies covered by this directive. Notwithstanding the reporting requirements under Directive 2013/34/EU, Member States should ensure that companies report on the matters covered by this Directive by publishing on their website, in an accessible and timely manner, their due diligence policies, prevention action plans, correction action plans, procedures for dealing with grievances, reports on the outcome of the assessments as well as other relevant information. |
Amendment 42
Proposal for a directive
Recital 44 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (44a) Companies should provide stakeholders adequate, comprehensive meaningful information about actual and potential adverse human rights, labour rights, environmental, rule of law and good governance impacts and the actions taken to respect their due diligence. Stakeholders should also be able to request additional information from a company regarding the actions taken to comply with the obligations set out in this Directive. The confidentiality of commercial and industrial information shall not serve as a bar for access to information that relates to the implementation, by a company, of the provisions of national law transposing this Directive. |
Amendment 43
Proposal for a directive
Recital 45 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (45a) A full, safe, transparent, meaningful and effective engagement of all relevant stakeholders throughout all the steps of due diligence process in the whole value chain is fundamental in order to ensure a proper implementation of this Directive. In line with international standards, that process should be interactive, accessible, responsive, continuous, gender-responsive, child-sensitive and adapted to vulnerable stakeholders. Their involvement should take place timely and prior to decisions, that could cause any adverse impacts. All relevant information needed by stakeholders to make informed judgments should be made available in a concise, comprehensive, and easily accessible and transparent manner, including meaningful information about operations, projects and investments and their actual and potential adverse impacts. |
Amendment 44
Proposal for a directive
Recital 45 b (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (45b) In particular, companies should pay special attention and ensure the meaningful engagement of potential impacted groups, including workers as well as human rights, environmental rights and rule of law and good governance defenders throughout the entire due diligence process. In line with the UNGPs and OECD Guidelines, companies should engage with potentially affected stakeholders, with the objective of understanding and responding to their interests and concerns. They should particularly engage with those who are likely to be the most vulnerable to adverse impacts in connection with the company’s operations or value chain, such as smallholders, farm workers, indigenous peoples and local communities, and women. The right to the free, prior, and informed consent of indigenous peoples and local communities should also be fully embedded in relevant engagement and consultation processes, in line with the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) and ILO Convention on Indigenous and Tribal Peoples. The engagement process should include the explicit recognition of the role of social dialogue and engagement with workers' representatives and trade unions, as described in the OECD Guidelines and International Labour Organisation (ILO) Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. |
Amendment 45
Proposal for a directive
Recital 45 c (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (45c) The Commission shall establish an expert advisory group to provide information and answer questions on this Directive in order to minimise implementation costs for the entitiesfalling within the scope of application of this Directive, as well as those outside of it. That would ensure that the quality of information obtained in the summation of the due diligence report is accurate and delivered in a timely manner. That will also decrease red tape for companies. |
Amendment 46
Proposal for a directive
Recital 46
| Text proposed by the Commission | Amendment |
|---|---|
| (46) In order to provide support and practical tools to companies or to Member State authorities on how companies should fulfil their due diligence obligations, the Commission, using relevant international guidelines and standards as a reference, and in consultation with Member States and stakeholders, the European Union Agency for Fundamental Rights, the European Environment Agency, and where appropriate with international bodies having expertise in due diligence, should have the possibility to issue guidelines, including for specific sectors or specific adverse impacts. | (46) In order to provide support and practical tools to companies or to Member State authorities on how companies should fulfil their due diligence obligations, the Commission, using relevant international guidelines and standards as a reference, and in consultation with Member States and stakeholders, the European Union Agency for Fundamental Rights, the European Environment Agency, the European Union Agency for Criminal Justice Cooperation (Eurojust), the European Union Agency for Law Enforcement Cooperation (Europol), the European Public Prosecutor’s Office, the European Anti-Fraud Office (OLAF) and where appropriate with international bodies having expertise in due diligence, should have the possibility to issue guidelines, including for specific sectors or specific adverse impacts. |
Amendment 47
Proposal for a directive
Recital 49
| Text proposed by the Commission | Amendment |
|---|---|
| (49) The Commission and Member States should continue to work in partnership with third countries to support upstream economic operators build the capacity to effectively prevent and mitigate adverse human rights and environmental impacts of their operations and business relationships, paying specific attention to the challenges faced by smallholders. They should use their neighbourhood, development and international cooperation instruments to support third country governments and upstream economic operators in third countries addressing adverse human rights and environmental impacts of their operations and upstream business relationships. This could include working with partner country governments, the local private sector and stakeholders on addressing the root causes of adverse human rights and environmental impacts. | (49) The Commission and Member States should continue to work in partnership with third countries to support upstream economic operators build the capacity to effectively prevent and mitigate adverse human rights, labour rights, environmental, rule of law and good governance impacts of their operations and business relationships, paying specific attention to the challenges faced by smallholders who are some of the most marginalised actors in the global value chains. If smallholders do not meet their needs, then they cannot afford the social (e.g. no child labour) and environmental improvements (e.g. no deforestation or sustainable diversification) that the buyers, governments and consumers expect from them. Henceforth, the Commission and Member States should use their neighbourhood, development, and international cooperation instruments as well as trade instruments, to support third country governments and upstream economic operators in third countries addressing adverse human rights, labour rights, environmental, rule of law and good governance impacts of their operations and upstream business relationships, including through capacity building and expertise that will facilitate companies falling within the scope of this Directive to comply with their due diligence obligations. This could include working with partner country governments, the local private sector and stakeholders on addressing the root causes of adverse human rights, labour rights, environmental, rule of law and good governance impacts. In the same line, the Commission and Member States should provide targeted support to stakeholders, including civil society organisations and human rights, labour rights, environmental and rule of law and good governance defenders in developing countries, in order to ensure their meaningful and safe engagement in all due diligence processes. In particular, support should be provided to national and local civil society organisations to monitor corporate practices and hold companies accountable and dedicated measures and funds should ease access to justice. The Commission should also consider specific support programs for human rights, labour rights, environmental and rule of law and good governance defenders at risk because of their monitoring of corporate activities. In addition, the Commission and Member States should increase their dialogue with third countries in order to contribute to the enabling of environments in which the risks of retaliation is minimise. |
Amendment 48
Proposal for a directive
Recital 50
| Text proposed by the Commission | Amendment |
|---|---|
| (50) In order to ensure that this Directive effectively contributes to combating climate change, companies should adopt a plan to ensure that the business model and strategy of the company are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement. In case climate is or should have been identified as a principal risk for or a principal impact of the company’s operations, the company should include emissions reduction objectives in its plan. | (50) In order to ensure that this Directive effectively contributes to combating climate change, companies should, in consultation with stakeholders, adopt a plan to ensure that the business model and strategy of the company are aligned with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement and with the objective of achieving climate neutrality by 2050 at the latest as established in Regulation (EU) 2021/1119, pursuant to the latest recommendations of the IPCC and the European Scientific Advisory Board on Climate Change. Accordingly, the company should include emissions reduction objectives in its plan. |
Amendment 49
Proposal for a directive
Recital 51
| Text proposed by the Commission | Amendment |
|---|---|
| (51) With a view to ensure that such emission reduction plan is properly implemented and embedded in the financial incentives of directors, the plan should be duly taken into account when setting directors’ variable remuneration, if variable remuneration is linked to the contribution of a director to the company’s business strategy and long-term interests and sustainability. | (51) With a view to ensure that such emission reduction plan is properly implemented and embedded in the financial incentives of directors, the plan should be duly taken into account when setting directors’ variable remuneration. |
Amendment 50
Proposal for a directive
Recital 54
| Text proposed by the Commission | Amendment |
|---|---|
| (54) In order to ensure effective enforcement of national measures implementing this Directive, Member States should provide for dissuasive, proportionate and effective sanctions for infringements of those measures. In order for such sanction regime to be effective, administrative sanctions to be imposed by the national supervisory authorities should include pecuniary sanctions. Where the legal system of a Member State does not provide for administrative sanctions as foreseen in this Directive, the rules on administrative sanctions should be applied in such a way that the sanction is initiated by the competent supervisory authority and imposed by the judicial authority. Therefore, it is necessary that those Member States ensure that the application of the rules and sanctions has an equivalent effect to the administrative sanctions imposed by the competent supervisory authorities. | (54) In order to ensure effective enforcement of national measures implementing this Directive, Member States should provide for dissuasive, proportionate and effective sanctions for infringements of those measures. In order for such sanction regime to be effective, administrative sanctions to be imposed by the national supervisory authorities should include pecuniary sanctions that are proportionate to the turnout of the company. The legal system of a Member State should provide for administrative sanctions as foreseen in this Directive, without prejudice of their review by the competent judicial authority. |
Amendment 51
Proposal for a directive
Recital 56
| Text proposed by the Commission | Amendment |
|---|---|
| (56) In order to ensure effective compensation of victims of adverse impacts, Member States should be required to lay down rules governing the civil liability of companies for damages arising due to its failure to comply with the due diligence process. The company should be liable for damages if they failed to comply with the obligations to prevent and mitigate potential adverse impacts or to bring actual impacts to an end and minimise their extent, and as a result of this failure an adverse impact that should have been identified, prevented, mitigated, brought to an end or its extent minimised through the appropriate measures occurred and led to damage. | (56) In order to ensure effective compensation of victims of adverse impacts, Member States should be required to lay down rules governing the civil liability of companies for damages arising from adverse impacts. Companies should be strictly liable for damages arising from any adverse impacts resulting from their own operations or those of their subsidiaries. As regards adverse impacts resulting from the operations of partners with whom companies have business relationships, companies should be liable for damages if they failed to comply with the obligations to prevent and mitigate potential adverse impacts or to bring actual impacts to an end and minimise their extent, and as a result of this failure an adverse impact that should have been identified, prevented, mitigated, brought to an end or its extent minimised through the appropriate measures occurred and led to damage. |
Amendment 52
Proposal for a directive
Recital 57
| Text proposed by the Commission | Amendment |
|---|---|
| (57) As regards damages occurring at the level of established indirect business relationships, the liability of the company should be subject to specific conditions. The company should not be liable if it carried out specific due diligence measures. However, it should not be exonerated from liability through implementing such measures in case it was unreasonable to expect that the action actually taken, including as regards verifying compliance, would be adequate to prevent, mitigate, bring to an end or minimise the adverse impact. In addition, in the assessment of the existence and extent of liability, due account is to be taken of the company’s efforts, insofar as they relate directly to the damage in question, to comply with any remedial action required of them by a supervisory authority, any investments made and any targeted support provided as well as any collaboration with other entities to address adverse impacts in its value chains. | (57) As regards damages occurring at the level of indirect business relationships, any person with a legitimate interest should be entitled to obtain from the company the full extent of damages resulting from any adverse impact and the company should benefit from a legal assurance to obtain compensation from the partners with whom it has a business relationship and who are responsible for the adverse impact. |
Amendment 53
Proposal for a directive
Recital 58
| Text proposed by the Commission | Amendment |
|---|---|
| (58) The liability regime does not regulate who should prove that the company’s action was reasonably adequate under the circumstances of the case, therefore this question is left to national law. | (58) The most significant barrier to access to justice for victims of adverse impacts is the difficulty in proving the company's failure to meet its obligations. Breaches of the obligations laid down in the Directive that have entailed damage for a person or a group of persons, can be extremely difficult to prove in court or before any other competent body by claimants, since many times this requires access to information that is only possessed by the company. Therefore, Member States shall take the necessary measures, in accordance with their national judicial systems, to ensure that, where persons who consider themselves wronged by failure to apply due diligence responsibilities establish, before a court or other competent body, facts from which it could be presumed that there has been a direct or indirect breach of the due diligence responsibilities, it shall be for the respondent to prove that the company’s action was adequate under the circumstances of the case, thus contributing to access to an effective remedy. |
Amendment 54
Proposal for a directive
Recital 58 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (58a) The right to an effective remedy is an internationally recognised human right, enshrined in Article 8 of the Universal Declaration of Human Rights, and Article 2(3) of the International Covenant on Civil and Political Rights, and is also a fundamental right of the Union within the meaning of Article 47 of the Charter. Member States should thus ensure that victims have access to an effective remedy and that the costs and the length of the proceedings do not prevent claimants from access to courts or to non-judicial bodies (or structures or mechanisms). These measures could for example, take the form of public funding, including structural support for victims of actual and potential adverse impacts, limitation of applicable court or administrative fees, or access to legal aid. |
Amendment 55
Proposal for a directive
Recital 59
| Text proposed by the Commission | Amendment |
|---|---|
| (59) As regards civil liability rules, the civil liability of a company for damages arising due to its failure to carry out adequate due diligence should be without prejudice to civil liability of its subsidiaries or the respective civil liability of direct and indirect business partners in the value chain. Also, the civil liability rules under this Directive should be without prejudice to Union or national rules on civil liability related to adverse human rights impacts or to adverse environmental impacts that provide for liability in situations not covered by or providing for stricter liability than this Directive. | (59) As regards civil liability rules, the civil liability of a company for damages arising due to its failure to carry out adequate due diligence should be without prejudice to civil liability of its subsidiaries or the respective civil liability of direct and indirect business partners in the value chain. Also, the civil liability rules under this Directive should be without prejudice to Union or national rules on civil liability related to adverse human rights impacts, adverse labour rights impacts or to adverse environmental impacts that provide for liability in situations not covered by or providing for stricter liability than this Directive. |
Amendment 56
Proposal for a directive
Recital 59 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (59a) Trade unions, civil society organisations or other relevant actors acting in the public interest, such as national human rights institutions or ombudsmen, should be able to bring representative actions before their courts on behalf and for the protection of the collective interests of victims of actual and potential adverse impacts, and those entities should have the rights and obligations of a claimant party in the proceedings. |
Amendment 57
Proposal for a directive
Recital 61
| Text proposed by the Commission | Amendment |
|---|---|
| (61) In order to ensure that victims of human rights and environmental harms can bring an action for damages and claim compensation for damages arising due to a company’s failure to comply with the due diligence obligations stemming from this Directive, even where the law applicable to such claims is not the law of a Member State, as could be for instance be the case in accordance with international private law rules when the damage occurs in a third country, this Directive should require Member States to ensure that the liability provided for in provisions of national law transposing this Article is of overriding mandatory application in cases where the law applicable to claims to that effect is not the law of a Member State. | (61) In order to ensure that victims of human rights, labour rights, environmental, rule of law and good governance harms can bring an action for damages and claim compensation for damages arising due to a company’s failure to comply with the due diligence obligations stemming from this Directive, even where the law applicable to such claims is not the law of a Member State, as could be for instance be the case in accordance with international private law rules when the damage occurs in a third country, in particular in developing countries, this Directive should require Member States to ensure that the liability provided for in provisions of national law transposing this Article is of overriding mandatory application in cases where the law applicable to claims to that effect is not the law of a Member State. |
Amendment 58
Proposal for a directive
Recital 64
| Text proposed by the Commission | Amendment |
|---|---|
| (64) Responsibility for due diligence should be assigned to the company’s directors, in line with the international due diligence frameworks. Directors should therefore be responsible for putting in place and overseeing the due diligence actions as laid down in this Directive and for adopting the company’s due diligence policy, taking into account the input of stakeholders and civil society organisations and integrating due diligence into corporate management systems. Directors should also adapt the corporate strategy to actual and potential impacts identified and any due diligence measures taken. | (64) Responsibility for due diligence should be assigned to the company’s directors, in line with the international due diligence frameworks. Directors should therefore be responsible for putting in place and overseeing the due diligence actions as laid down in this Directive and for adopting the company’s due diligence policy, taking into account the input of stakeholders and civil society organisations jointly identified as relevant and integrating due diligence into corporate management systems. Directors should also adapt the corporate strategy to actual and potential impacts identified and any due diligence measures taken. |
Amendment 59
Proposal for a directive
Recital 65
| Text proposed by the Commission | Amendment |
|---|---|
| (65) Persons who work for companies subject to due diligence obligations under this Directive or who are in contact with such companies in the context of their work-related activities can play a key role in exposing breaches of the rules of this Directive. They can thus contribute to preventing and deterring such breaches and strengthening the enforcement of this Directive. Directive (EU) 2019/1937 of the European Parliament and of the Council106 should therefore apply to the reporting of all breaches of this Directive and to the protection of persons reporting such breaches. | (65) Persons who work for companies subject to due diligence obligations under this Directive or who are in contact with such companies in the context of their work-related activities can play a key role in exposing breaches of the rules of this Directive. They can thus contribute to preventing and deterring such breaches and strengthening the enforcement of this Directive. Directive (EU) 2019/1937 of the European Parliament and of the Council106 should therefore apply to the reporting of all breaches of this Directive and to the protection of persons reporting such breaches. In particular, stakeholders submitting complaints or concerns should be effectively protected, notably by ensuring the confidentiality and anonymity of the complaint or concern raised. |
| 106 Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (OJ L 305, 26.11.2019, p. 17). | 106 Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (OJ L 305, 26.11.2019, p. 17). |
Amendment 60
Proposal for a directive
Recital 65 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (65a) Human rights, labours rights, environmental rights and rule of law and good governance defenders are on the front line of the consequences of adverse environmental, human rights and rule of law and good governance impacts worldwide and in the Union, and could be directly threatened, intimidated, persecuted, harassed or even murdered, and as such should also benefit from balanced and effective protection. Companies should measure the actual and potential risks of their activities, as well as contextual risks to human rights, labour rights, environmental rights and rule of law and good governance defenders, engage with them and publish a policy on defenders that includes a zero-tolerance stance on threats or violence against them. Company policies must explicitly include in their due diligence protocols for safeguarding the rights of land and environmental rights defenders. |
Amendment 61
Proposal for a directive
Recital 69
| Text proposed by the Commission | Amendment |
|---|---|
| (69) This Directive is without prejudice to obligations in the areas of human rights, protection of the environment and climate change under other Union legislative acts. If the provisions of this Directive conflict with a provision of another Union legislative act pursuing the same objectives and providing for more extensive or more specific obligations, the provisions of the other Union legislative act should prevail to the extent of the conflict and shall apply to those specific obligations. | (69) This Directive is guided by the principle of “do not harm”, in accordance with the obligations in the areas of human rights, protection of the environment and climate change under other Union legislative acts. If the provisions of this Directive conflict with a provision of another Union legislative act pursuing the same objectives and providing for more extensive or more specific obligations, the provisions of the other Union legislative act should prevail to the extent of the conflict and shall apply to those specific obligations. |
Amendment 62
Proposal for a directive
Recital 70
| Text proposed by the Commission | Amendment |
|---|---|
| (70) The Commission should assess and report whether new sectors should be added to the list of high-impact sectors covered by this Directive, in order to align it to guidance from the Organisation for Economic Cooperation and Development or in light of clear evidence on labour exploitation, human rights violations or newly emerging environmental threats, whether the list of relevant international conventions referred to in this Directive should be amended, in particular in the light of international developments, or whether the provisions on due diligence under this Directive should be extended to adverse climate impacts. | (70) The Commission should assess and report on a regular basis whether new sectors should be added to the list of high-impact sectors covered by this Directive, in order to align it to guidance from the Organisation for Economic Cooperation and Development or in light of clear evidence on labour exploitation, human rights violations or newly emerging environmental threats, whether the list of relevant international conventions referred to in this Directive should be amended, in particular in the light of international developments. |
Amendment 63
Proposal for a directive
Recital 71
| Text proposed by the Commission | Amendment |
|---|---|
| (71) The objective of this Directive, namely better exploiting the potential of the single market to contribute to the transition to a sustainable economy and contributing to sustainable development through the prevention and mitigation of potential or actual human rights and environmental adverse impacts in companies’ value chains, cannot be sufficiently achieved by the Member States acting individually or in an uncoordinated manner, but can rather, by reason of the scale and effects of the actions, be better achieved at Union level. In particular, addressed problems and their causes are of a transnational dimension, as many companies are operating Union wide or globally and value chains expand to other Member States and to third countries. Moreover, individual Member States’ measures risk being ineffective and lead to fragmentation of the internal market. Therefore, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 TEU. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve that objective. | (71) The objective of this Directive, namely better exploiting the potential of the single market to contribute to the transition to a sustainable economy and contributing to sustainable development through the prevention, mitigation and remediation of potential or actual human rights, labour rights, and environmental, rule of law and good governance adverse impacts in companies’ value chains, cannot be sufficiently achieved by the Member States acting individually or in an uncoordinated manner, but can rather, by reason of the scale and effects of the actions, be better achieved at Union level. In particular, addressed problems and their causes are of a transnational dimension, as many companies are operating Union wide or globally and value chains expand to other Member States and to third countries. Moreover, individual Member States’ measures risk being ineffective and lead to fragmentation of the internal market. Therefore, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 TEU. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve that objective. |
Amendment 64
Proposal for a directive
Article 1
| Text proposed by the Commission | Amendment |
|---|---|
| Article 1 | Article 1 |
| Subject matter | Subject matter |
| -1. This Directive aims to ensure that companies respect human rights, labour rights, rule of law and good governance and protect the environment within their own operations, products and services, and those of their subsidiaries, and value chains. | |
| 1. This Directive lays down rules | 1. This Directive lays down rules |
| (a) on obligations for companies regarding actual and potential human rights adverse impacts and environmental adverse impacts, with respect to their own operations, the operations of their subsidiaries, and the value chain operations carried out by entities with whom the company has an established business relationship and | (a) on obligations for companies regarding the risk based approach to addressing their actual and potential human and labour rights adverse impacts, environmental and climate adverse impacts and rule of law and good governance adverse impacts, with respect to their own operations, products and services, the operations, products and services of their subsidiaries, and the value chain operations carried out by entities with whom the company has a business relationship, |
| (b) on liability for violations of the obligations mentioned above. | (b) on liability for violations of the obligations mentioned above, and |
| (b a) on access to justice, including judicial and non-judicial remedies for victims of the adverse impacts and persons or groups of persons with legitimate interests. | |
| The nature of business relationships as ‘established’ shall be reassessed periodically, and at least every 12 months. | |
| 2. This Directive shall not constitute grounds for reducing the level of protection of human rights or of protection of the environment or the protection of the climate provided for by the law of Member States at the time of the adoption of this Directive. | 2. This Directive shall not constitute grounds for reducing the level of protection of human and labour rights or of protection of the environment or the protection of the climate or the rule of law and good governance provided for by the law of Member States at the time of the adoption of this Directive and by any other applicable law. |
| 3. This Directive shall be without prejudice to obligations in the areas of human rights, protection of the environment and climate change under other Union legislative acts. If the provisions of this Directive conflict with a provision of another Union legislative act pursuing the same objectives and providing for more extensive or more specific obligations, the provisions of the other Union legislative act shall prevail to the extent of the conflict and shall apply to those specific obligations. | 3. This Directive shall be without prejudice to obligations in the areas of human rights, protection of the environment and climate change, the protection of labour rights and the respect of the rule of law and good governance, under other Union legislative acts. If the provisions of this Directive conflict with a provision of another Union legislative act pursuing the same objectives and providing for more extensive or more specific obligations, the provisions of the other Union legislative act shall prevail to the extent of the conflict and shall apply to those specific obligations. |
Amendment 65
Proposal for a directive
Article 2
| Text proposed by the Commission | Amendment |
|---|---|
| Article 2 | Article 2 |
| Scope | Scope |
| 1. This Directive shall apply to companies which are formed in accordance with the legislation of a Member State and which fulfil one of the following conditions: | 1. This Directive shall apply to companies and groups of undertakings which are formed in accordance with the legislation of a Member State and which fulfil one of the following conditions: |
| (a) the company had more than 500 employees on average and had a net worldwide turnover of more than EUR 150 million in the last financial year for which annual financial statements have been prepared; | (a) the company had more than 250 employees on average and had a net worldwide turnover of more than EUR 40 million in the last financial year for which annual financial statements have been prepared; |
| (b) the company did not reach the thresholds under point (a), but had more than 250 employees on average and had a net worldwide turnover of more than EUR 40 million in the last financial year for which annual financial statements have been prepared, provided that at least 50% of this net turnover was generated in one or more of the following sectors: | (b) the company did not reach the thresholds under point (a), but had more than 50 employees on average and had a net worldwide turnover of more than EUR 8 million in the last financial year for which annual financial statements have been prepared, provided that at least 50% of this net turnover was generated in one or more of the following sectors: |
| (i) the manufacture of textiles, leather and related products (including footwear), and the wholesale trade of textiles, clothing and footwear; | (i) the manufacture of textiles, clothing, leather and related products (including footwear), and the wholesale and retail trade of textiles, clothing and footwear; |
| (ii) agriculture, forestry, fisheries (including aquaculture), the manufacture of food products, and the wholesale trade of agricultural raw materials, live animals, wood, food, and beverages; | (ii) agriculture, forestry, fisheries (including aquaculture), management of land and resources (including in relation to nature conservation or other related activities), the manufacture of food products, and the wholesale trade of agricultural raw materials, live animals, wood, food, and beverages and sale to consumers; |
| (iii) the extraction of mineral resources regardless from where they are extracted (including crude petroleum, natural gas, coal, lignite, metals and metal ores, as well as all other, non-metallic minerals and quarry products), the manufacture of basic metal products, other non-metallic mineral products and fabricated metal products (except machinery and equipment), and the wholesale trade of mineral resources, basic and intermediate mineral products (including metals and metal ores, construction materials, fuels, chemicals and other intermediate products). | (iii) energy, the extraction, transport, processing, refining and handling of mineral resources regardless from where they are extracted (including crude petroleum, natural gas, coal, lignite, metals and metal ores, as well as all other, non-metallic minerals and quarry products), the manufacture of basic metal products, other non-metallic mineral products and fabricated metal products (except machinery and equipment), the manufacture of computer, electronic and optical products and the wholesale trade of mineral resources, basic and intermediate mineral products (including metals and metal ores, construction materials, fuels, chemicals and other intermediate products); |
| (iii a) construction, logistics and infrastructures and other civil engineering projects; and | |
| (iii b) oil and gas production and oil refining sector. | |
| 2. This Directive shall also apply to companies which are formed in accordance with the legislation of a third country, and fulfil one of the following conditions: | 2. This Directive shall also apply to companies which are formed in accordance with the legislation of a third country, and fulfil one of the following conditions: |
| (a) generated a net turnover of more than EUR 150 million in the Union in the financial year preceding the last financial year; | (a) generated a net turnover of more than EUR 40 million in the Union in the financial year preceding the last financial year; |
| (b) generated a net turnover of more than EUR 40 million but not more than EUR 150 million in the Union in the financial year preceding the last financial year, provided that at least 50% of its net worldwide turnover was generated in one or more of the sectors listed in paragraph 1, point (b). | (b) generated a net turnover of more than EUR 8 million but not more than EUR 40 million in the Union in the financial year preceding the last financial year, provided that at least 50% of its net worldwide turnover was generated in one or more of the sectors listed in paragraph 1, point (b). |
| 3. For the purposes of paragraph 1, the number of part-time employees shall be calculated on a full-time equivalent basis. Temporary agency workers shall be included in the calculation of the number of employees in the same way as if they were workers employed directly for the same period of time by the company. | 3. For the purposes of this Directive, the number of part-time employees shall be calculated on a full-time equivalent basis. Temporary agency workers shall be included in the calculation of the number of employees in the same way as if they were workers employed directly for the same period of time by the company. Furthermore: |
| (a) the average number of employees shall include: | |
| (i) employees in the company; | |
| (ii) employees in its directly and indirectly-owned subsidiaries and branches; and | |
| (iii) employees in third party undertakings with whom the company or its directly and indirectly-owned subsidiaries and branches have entered into a vertical agreement in return for payment of royalties or an outsourcing agreement or a subcontracting agreement; | |
| (b) the net turnover shall include the net worldwide turnover generated by: | |
| (i) the company; and | |
| (ii) its directly and indirectly-owned subsidiaries and branches, and third party undertakings with whom the company or its directly and indirectly-owned subsidiaries and branches have entered into a vertical agreement in return for payment of royalties or an outsourcing agreement or a subcontracting agreement. | |
| For the purposes of paragraph 2, the net turnover shall include: | |
| (i) the net turnover generated in the Union by the company; | |
| (ii) the net turnover generated in the Union by its directly and indirectly-owned subsidiaries and branches; and | |
| (iii) the net turnover generated in the Union through third-party undertakings with whom the company or its directly and indirectly-owned subsidiaries and branches have entered into a vertical agreement in return for payment of royalties or an outsourcing agreement or a subcontracting agreement. | |
| 4. As regards the companies referred to in paragraph 1, the Member State competent to regulate matters covered in this Directive shall be the Member State in which the company has its registered office. | 4. As regards the companies referred to in paragraph 1, the Member State competent to regulate matters covered in this Directive shall be the Member State in which the company has its registered office. |
Amendment 66
Proposal for a directive
Article 3 – paragraph 1 – point a – point iii a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (iiia) a legal person of any type which, regardless of the purpose for which it was constituted and the sector in which it operates, undertakes activities of commercial nature; |
Amendment 67
Proposal for a directive
Article 3 – paragraph 1 – point b
| Text proposed by the Commission | Amendment |
|---|---|
| (b) ‘adverse environmental impact’ means an adverse impact on the environment resulting from the violation of one of the prohibitions and obligations pursuant to the international environmental conventions listed in the Annex, Part II; | (b) ‘adverse environmental impact’ means any severe harm on the environment resulting from the violation of one of the prohibitions and obligations established under international environmental law, including, but not limited to, the international environmental conventions listed in the Annex, Part II, a violation within the meaning of Directive (EU) .../... of the European Parliament and of the Council1a of ... on the protection of the environment through criminal law, or an adverse impact on one of the following environmental categories, but not limited to them: |
| (a) air quality, air pollution and atmosphere; | |
| (b) water pollution, water contamination, access to water and depletion of fresh water; | |
| (c) soil, such as soil pollution, soil contamination, soil erosion land use and land degradation; | |
| (d) biodiversity, including damage to wildlife, seabed and marine environment, flora, fauna, natural habitats and ecosystems; | |
| (e) human health in accordance with the 'One Health' approach; | |
| (f) climate, including through greenhouse gas emissions and the destruction or degradation of sinks; and | |
| (g) transition to circular economy, including but not limited to, impairment to reusability and recyclability such as contamination of waste streams with hazardous substance. | |
| 1a Directive (EU) .../... of the European Parliament and of the Council of ... on the protection of the environment through criminal law. |
Amendment 68
Proposal for a directive
Article 3 – paragraph 1 – point c
| Text proposed by the Commission | Amendment |
|---|---|
| (c) ‘adverse human rights impact’ means an adverse impact on protected persons resulting from the violation of one of the rights or prohibitions listed in the Annex, Part I Section 1, as enshrined in the international conventions listed in the Annex, Part I Section 2; | (c) ‘adverse human and labour rights impact’ means any harm to or reduction of the enjoyment of human and labour rights of a person or group of persons, as enshrined in international conventions, in particular the conventions listed in the Annex, Part I Section 2 and especially the protected position in the Annex, Part I Section 1 and established through the relevant case law and the work of competent committees; |
Amendment 69
Proposal for a directive
Article 3 – paragraph 1 – point c (a) new
| Text proposed by the Commission | Amendment |
|---|---|
| (ca) "adverse rule of law and good governance impact" includes violations listed in Annex, Part IIa, as defined by relevant international instruments and means harm caused to the effective functioning of the rule of law and good governance systems in a country, region or territory where the company or its subsidiary or partners in the value chain operate when the obligations and prohibitions pursuant to the legal acts on the international or regional rule of law or good governance are violated, including anti-corruption conventions; "adverse rule of law and good governance impact" also includes impacts on informal structures; |
Amendment 70
Proposal for a directive
Article 3 – paragraph 1 – point e – introductory part
| Text proposed by the Commission | Amendment |
|---|---|
| (e) ‘business relationship’ means a relationship with a contractor, subcontractor or any other legal entities (‘partner’) | (e) ‘business relationship’ means a relationship between a company or one of its subsidiaries and a contractor, subcontractor or any other legal entities (‘partner’) within the value chain |
Amendment 71
Proposal for a directive
Article 3 – paragraph 1 – point f
| Text proposed by the Commission | Amendment |
|---|---|
| (f) ‘established business relationship’ means a business relationship, whether direct or indirect, which is, or which is expected to be lasting, in view of its intensity or duration and which does not represent a negligible or merely ancillary part of the value chain; | deleted |
Amendment 72
Proposal for a directive
Article 3 – paragraph 1 – point g
| Text proposed by the Commission | Amendment |
|---|---|
| (g) ‘value chain’ means activities related to the production of goods or the provision of services by a company, including the development of the product or the service and the use and disposal of the product as well as the related activities of upstream and downstream established business relationships of the company. As regards companies within the meaning of point (a)(iv), ‘value chain’ with respect to the provision of these specific services shall only include the activities of the clients receiving such loan, credit, and other financial services and of other companies belonging to the same group whose activities are linked to the contract in question. The value chain of such regulated financial undertakings does not cover SMEs receiving loan, credit, financing, insurance or reinsurance of such entities; | (g) ‘value chain’ means activities related to the production, distribution or sale of goods, or the provision of services by a company, or any of its directly and indirectly-owned subsidiaries and branches, including the development of the product or the service and the use and disposal of the product as well as the related activities of upstream and downstream business relationships of the company and including informal working schemes as well as subcontracting and home-based work. The value chain of regulated financial undertakings with respect to the provision of financing, insurance or reinsurance does not cover SMEs and natural persons receiving loan, credit, financing, insurance or reinsurance of such entities. The downstream value chain of such regulated financial undertakings only covers clients that are direct business partners; |
Amendment 73
Proposal for a directive
Article 3 – paragraph 1 – point h
| Text proposed by the Commission | Amendment |
|---|---|
| (h) ‘independent third-party verification’ means verification of the compliance by a company, or parts of its value chain, with human rights and environmental requirements resulting from the provisions of this Directive by an auditor which is independent from the company, free from any conflicts of interests, has experience and competence in environmental and human rights matters and is accountable for the quality and reliability of the audit; | (h) ‘independent third-party verification’ means verification of the compliance by a company, or parts of its value chain, with human rights, labour rights and environmental, rule of law and good governance requirements resulting from the provisions of this Directive by an auditor which is independent from the company, free from any conflicts of interests, has experience and competence in environmental, labour and human rights, rule of law and good governance matters and is accountable for the quality and reliability of the audit; |
Amendment 74
Proposal for a directive
Article 3 – paragraph 1 – point l
| Text proposed by the Commission | Amendment |
|---|---|
| (l) ‘severe adverse impact’ means an adverse environmental impact or an adverse human rights impact that is especially significant by its nature, or affects a large number of persons or a large area of the environment, or which is irreversible, or is particularly difficult to remedy as a result of the measures necessary to restore the situation prevailing prior to the impact; | (l) ‘severe adverse impact’ means an adverse environmental impact, an adverse human and labour rights impact or an adverse damage to the functioning of the rule of law and governance systems of the country or the region or territory where the company or its subsidiaries in value chain operate, that is especially significant by its nature, or affects a large number of persons or a large area of the environment, or which is irreversible, or is particularly difficult to remedy as a result of the measures necessary to restore the situation prevailing prior to the impact, or affects key institutions or structures in charge of providing protection and services to the population or protecting the environment in a manner that makes them unable to perform their functions, interfering in the decision-making processes mediating corruption, violence or intimidation and impeding the enjoyment by populations of their human rights or seriously affecting the environment; |
Amendment 75
Proposal for a directive
Article 3 – paragraph 1 – points n
| Text proposed by the Commission | Amendment |
|---|---|
| (n) ‘stakeholders’ means the company’s employees, the employees of its subsidiaries, and other individuals, groups, communities or entities whose rights or interests are or could be affected by the products, services and operations of that company, its subsidiaries and its business relationships; | (n) ‘stakeholders’ means: |
| (i) the company’s employees, the employees of its subsidiaries and value chains workers, and other individuals, groups, communities or entities, or civil society organisations and trade unions whose rights or interests are or could be affected by the potential or actual adverse impacts on human rights, environment, the rule of law and good governance systems caused by a company, its subsidiaries and its business relationships, including through the value chain; | |
| (ii) other legal or natural persons engaging, promoting, representing, protecting and defending, as part of their statutory purpose or otherwise, issues related to this Directive; |
Amendment 76
Proposal for a directive
Article 3 – paragraph 1 – point n a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (na) ‘human and labour rights, environmental and rule of law and good governance defenders’ mean individuals, groups and structures of society, including non-government organisations, that promote or strive for the protection and realisation of universally recognised human rights and fundamental freedoms and for the defence of the environment and the rule of law and good governance; |
Amendment 77
Proposal for a directive
Article 3 – paragraph 1 – point n b (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (nb) ‘vulnerable stakeholders’ means individuals and right-holder groups that find themselves in marginalised situations and situations of vulnerability, due to specific contexts or intersecting factors, including, among others, their sex, gender, age, race, ethnicity, class, education, indigenous identity, migration status, disability, as well as social and economic status, which are the causes of differentiated and often disproportionate adverse impacts, and create discrimination and an additional barrier to participation and access to justice; |
Amendment 78
Proposal for a directive
Article 3 – paragraph 1 – point n c (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (nc) ‘meaningful engagement’ means an ongoing process of interaction and dialogue between a company and affected stakeholders that enables the company to hear, understand and respond to their interests and concerns in good faith. It includes a proactive, interactive, responsive, ongoing and gender-responsive, child-sensitive process of engagement with stakeholders and their representative organisations, adapted to vulnerable stakeholders, such as smallholders, indigenous people and local communities and taking place throughout the entire due diligence process, which ensures a proper follow-up of the implementation of agreed commitments, ensuring that adverse impacts to impacted and potentially impacted stakeholders are addressed; |
Amendment 79
Proposal for a directive
Article 3 – paragraph 1 – point q
| Text proposed by the Commission | Amendment |
|---|---|
| (q) ‘appropriate measure’ means a measure that is capable of achieving the objectives of due diligence, commensurate with the degree of severity and the likelihood of the adverse impact, and reasonably available to the company, taking into account the circumstances of the specific case, including characteristics of the economic sector and of the specific business relationship and the company’s influence thereof, and the need to ensure prioritisation of action. | (q) ‘appropriate measures’ means a set of measures that are capable of achieving the objectives of due diligence and effectively addressing the potential or actual adverse impact, commensurate with the degree of severity and the likelihood of the adverse impact, and reasonably available to the company, after meaniningul, proven and regular engagement and consultation with relevant stakeholders taking into account the circumstances of the specific case, including characteristics of the economic sector and of the specific business relationship and the company’s influence, and the need to ensure prioritisation of action; |
Amendment 80
Proposal for a directive
Article 3 – paragraph 1 – point q a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (qa) ‘conflict-affected and high-risk areas’ means areas in a state of armed conflict or fragile post-conflict areas, areas under occupation or annexation, as well as areas witnessing weak or non-existent rule of law and governance and security, such as failed states, and widespread and severe violations of international humanitarian or human rights law; |
Amendment 81
Proposal for a directive
Article 3 – paragraph 1 – point q b (new)
| Text proposed by the Commission | Amendment |
|---|---|
| (qb) ‘high risk sectors’ means sectors of activity that are associated with a higher likelihood or severity of adverse impacts on human rights, labour rights, the environment and climate or on rule of law and good governanceand which are listed in Annex, Part II b. |
Amendment 82
Proposal for a directive
Article 4 – paragraph 1
| Text proposed by the Commission | Amendment |
|---|---|
| 1. Member States shall ensure that companies conduct human rights and environmental due diligence as laid down in Articles 5 to 11 (‘due diligence’) by carrying out the following actions: | 1. Member States shall ensure that companies respect human rights, environment and rule of law and good governance and do not, directly or indirectly, cause or contribute to adverse impacts on human rights, environment and rule of law and good governance, by obliging them to conduct a proper due diligence process as laid down in Articles 5 to 11 (‘due diligence’) by carrying out the following actions using a risk-based approach by means of: |
| (a) integrating due diligence into their policies in accordance with Article 5; | (a) integrating due diligence into their policies in accordance with Article 5; |
| (b) identifying actual or potential adverse impacts in accordance with Article 6; | (b) identifying actual or potential risks and adverse impacts in accordance with Article 6; |
| (c) preventing and mitigating potential adverse impacts, and bringing actual adverse impacts to an end and minimising their extent in accordance with Articles 7 and 8; | (c) preventing potential adverse impacts, mitigating actual adverse impacts, bringing them to an end, minimising their extent and remediating them in accordance with Articles 7 and 8; |
| (ca) ensuring that due diligence is an ongoing and preventive process carried out on the basis of prioritisation based on the level of severity, likelihood and urgency of potential and actual adverse impacts, the nature and the context of operations in accordance with Article 7; | |
| (cb) where necessary, disengaging responsibly; | |
| (d) establishing and maintaining a complaints procedure in accordance with Article 9; | (d) establishing and maintaining effective grievance mechanisms in accordance with Article 9; |
| (e) monitoring the effectiveness of their due diligence policy and measures in accordance with Article 10; | (e) monitoring and assessing the effectiveness of their due diligence policy and measures in accordance with Article 10; |
| (f) publicly communicating on due diligence in accordance with Article 11. | (f) publicly reporting on due diligence in accordance with Article 11; |
| (fa) ensuring a meaningful, regular, accessible, as well as a safe and timely engagement with stakeholders and their business relationships throughout the due diligence process in accordance with Article 11a. |
Amendment 83
Proposal for a directive
Article 4 – paragraph 1 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| 1a. Member States shall ensure that companies do not engage in business models and strategies that cause or contribute to adverse impacts on human rights, the environment and on the rule of law and good governance and that companies identify, prevent, mitigate and account for how they address the impacts on human rights, the environment, rule of law and good governance occurring in their operations, the operations of their subsidiaries, and in their value chains. |
Amendment 84
Proposal for a directive
Article 4 – paragraph 1 b (new)
| Text proposed by the Commission | Amendment |
|---|---|
| 1b. Member States shall ensure that companies operating in conflict-affected and high-risk areas conduct heightened conflict-sensitive due diligence to address the higher risks of gross human rights violations and damages to the environment and to ensure that their operations and activities do not aggravate or finance the conflicts. That heightened due diligence process shall include a conflict sensitive analysis and an effective, safe and meaningful engagement with stakeholders in accordance with Article 11a. Member States shall ensure that companies operating in the conflict-affected and high-risk areas respect their international humanitarian law obligations. |
Amendment 85
Proposal for a directive
Article 5
| Text proposed by the Commission | Amendment |
|---|---|
| Article 5 | Article 5 |
| Integrating due diligence into companies’ policies | Integrating due diligence into companies’ policies |
| 1. Member States shall ensure that companies integrate due diligence into all their corporate policies and have in place a due diligence policy. The due diligence policy shall contain all of the following: | 1. Member States shall ensure that companies integrate due diligence into all their corporate policies and adopt, publish and implement a due diligence policy. The due diligence policy shall provide for meaningful, safe and regular engagement with stakeholders in accordance with Article 11a using a risk-based approach and shall contain at least all of the following: |
| (a) a description of the company’s approach, including in the long term, to due diligence; | (a) a description of the company’s approach, including in the short, medium and long term, to due diligence which includes a comprehensive description of the company, of its business relationships and value chains, including inter alia a list of the company’s business relationships and production sites; |
| (b) a code of conduct describing rules and principles to be followed by the company’s employees and subsidiaries; | (b) a code of conduct defining rules and principles to be followed by the company’s management, employees, subsidiaries and value chain partners, and established with the full engagement and relevant consultation with relevant stakeholders in accordance with Article 11a; |
| (c) a description of the processes put in place to implement due diligence, including the measures taken to verify compliance with the code of conduct and to extend its application to established business relationships. | (c) a description of the processes put in place to implement due diligence across the value chain, including: |
| (i) the measures taken to verify compliance with the code of conduct including tools, methodology, objectives and timeline of the measures; | |
| (ii) the measures to extend its application to business relationships, including contractual provisions; and | |
| (iii) a description of the measures to ensure the safety, meaningful engagement with stakeholders in compliance with Article 11 a; | |
| (ca) a description of the actual and potential adverse impacts identified and assessed in accordance with Article 6, in relation to the company’s direct and indirect operations including through any of its directly and indirectly-owned subsidiaries and branches, business operations and value chains; | |
| (cb) a description of the measures aimed at preventing and mitigating potential adverse impacts, and bringing actual adverse impacts to an end and minimising their extent in accordance with Articles 7 and 8; | |
| (cc) capacity of weaker business partners to carry out due diligence, taking into account the leverage of the company to ensure that the costs of the due diligence process are not passed on to business partners in a weaker position; and | |
| (cd) a description of the grievance mechanism referred to Article 9; | |
| When the description of the processes referred to in point (c) includes reference to independent third-party verification, companies shall add to their due diligence policy a comprehensive report on the results of third-party audits over the preceding three years. | |
| 1a. For undertakings operating in one of the sectors referred to in Article 3, point (qb), the description of the company’s approach, the code of conduct and description of the processes and measures required under paragraph 1, points (a) to (c), of this Article shall also include a detailed focus on the risks and impacts that are specific to that sector. | |
| 2. Member States shall ensure that the companies update their due diligence policy annually. | 2. Member States shall ensure that the companies review, update and publish their due diligence policy promptly once they identify any new actual and potential adverse impacts or when substantial changes in their value chains have occurred, and at least annually. Companies’ due diligence policies shall be publicly accessible. |
| 2a. Member States shall lay down rules to ensure that management or supervisory bodies, as the case may be, depending on national laws of the companies referred to in Article 2(1) put in place and oversee the due diligence actions referred to in Article 4 and, in particular the due diligence policy referred to in this Article, with due consideration of relevant input from stakeholders. | |
| 2b. Developing and applying common standards and principles for a code of conduct within and across industries, to support efficient compliance with this Directive shall not constitute a breach of applicable competition law. |
Amendment 86
Proposal for a directive
Article 6
| Text proposed by the Commission | Amendment |
|---|---|
| Article 6 | Article 6 |
| Identifying actual and potential adverse impacts | Identifying and assessing actual and potential adverse impacts |
| 1. Member States shall ensure that companies take appropriate measures to identify actual and potential adverse human rights impacts and adverse environmental impacts arising from their own operations or those of their subsidiaries and, where related to their value chains, from their established business relationships, in accordance with paragraph 2, 3 and 4. | 1. Member States shall ensure that companies take appropriate measures to identify and assess actual and potential adverse human and labour rights impacts and, adverse environmental, rule of law and good governance impacts arising from their own business models and strategies, operations, products and services or, those of their subsidiaries and partners in their value chains with whom the companies have business relationships, according to a risk-based approach and in accordance with paragraph 2, 3 and 4. |
| 1a. Member States shall ensure that companies map their value chains and publicly disclose relevant information including names, locations, types of products and services supplied, and other relevant information concerning subsidiaries and business. Based on the results of that mapping, companies may carry out an in-depth assessment of the areas where adverse impacts were identified to be most likely to be present or most significant. | |
| 1b. Severity of an adverse impacts shall be assessed based on its gravity, its high likelihood of occurrence, the number of persons or the extent of the environment affected, its irreversibility, and the difficulty to provide remedy considering the measures necessary to restore the situation prevailing prior to the impact. | |
| 2. By way of derogation from paragraph 1, companies referred to in Article 2(1), point (b), and Article 2(2), point (b), shall only be required to identify actual and potential severe adverse impacts relevant to the respective sector mentioned in Article 2(1), point (b). | 2. By way of derogation from paragraph 1, companies referred to in Article 2(1), point (b), and Article 2(2), point (b), shall only be required to identify actual and potential adverse impacts relevant to the respective sector mentioned in Article 2(1), point (b). |
| 3. When companies referred to in Article 3, point (a)(iv), provide credit, loan or other financial services, identification of actual and potential adverse human rights impacts and adverse environmental impacts shall be carried out only before providing that service. | 3. When companies referred to in Article 3, point (a)(iv), provide credit, loan or other financial services, identification of actual and potential adverse human rights impacts and adverse environmental rule of law and good governance impacts shall be carried out according to appropriate risk-based measures only before providing that service. |
| 4. Member States shall ensure that, for the purposes of identifying the adverse impacts referred to in paragraph 1 based on, where appropriate, quantitative and qualitative information, companies are entitled to make use of appropriate resources, including independent reports and information gathered through the complaints procedure provided for in Article 9. Companies shall, where relevant, also carry out consultations with potentially affected groups including workers and other relevant stakeholders to gather information on actual or potential adverse impacts. | 4. Member States shall ensure that, for the purposes of identifying and assessing the adverse impacts referred to in paragraph 1 based on quantitative and qualitative information, companies make use of appropriate resources, including publicly accessible information and independent reports, information communicated to them and information gathered through the grievance mechanisms provided for in Article 9. Companies shall also have an effective and meaningful engagement with all relevant stakeholders and their representative organisations, including workers and potentially affected groups to gather information on actual or potential adverse impacts. This approach in the financial services sector will be informed by clear financial sector guidelines. |
| 4a. Member States shall ensure that stakeholders are entitled to request additional information from a company regarding the actions taken in accordance with Article 4 and that the company respond to that request in accordance with Article 11 a. |
Amendment 87
Proposal for a directive
Article 7
| Text proposed by the Commission | Amendment |
|---|---|
| Article 7 | Article 7 |
| Preventing potential adverse impacts | Preventing potential adverse impacts |
| 1. Member States shall ensure that companies take appropriate measures to prevent, or where prevention is not possible or not immediately possible, adequately mitigate potential adverse human rights impacts and adverse environmental impacts that have been, or should have been, identified pursuant to Article 6, in accordance with paragraphs 2, 3, 4 and 5 of this Article. | 1. Member States shall ensure that companies take appropriate measures to prevent, or where prevention is not possible or not immediately possible, adequately mitigate potential adverse human and labour rights impacts as well as adverse environmental impacts or adverse rule of law and good governance impacts arising from their operations, products and services, those of their subsidiaries, and those occurring in their own activities and in their value chains and that have been, or should have been, identified pursuant to Article 6, using a risk-based approach. |
| 1 a. For the purposes of paragraph 1, companies shall be required to develop and implement a prevention action plan, with reasonable and clearly defined timelines for appropriate measures and qualitative and quantitative indicators for measuring improvement. The prevention action plan shall be publicly available and shall be developed with effective and meaningful engagement of stakeholders in accordance with Article 11 a. | |
| The appropriate measures shall apply to a company’s own operations, its subsidiaries as well as direct and indirect business relationships. | |
| In the event that the company is not in a position to prevent or mitigate all the potential adverse impacts at the same time, that plan shall include a prioritisation strategy which shall take into account the level of severity and likelihood of the different potential adverse impacts on human rights, the environment and on the rule of law and good governance systems. | |
| 2. Companies shall be required to take the following actions, where relevant: | 2. For the purposes of paragraphs 1 and 2, companies shall be required to take, appropriate measures, including the following actions: |
| (a) where necessary due to the nature or complexity of the measures required for prevention, develop and implement a prevention action plan, with reasonable and clearly defined timelines for action and qualitative and quantitative indicators for measuring improvement. The prevention action plan shall be developed in consultation with affected stakeholders; | |
| (b) seek contractual assurances from a business partner with whom it has a direct business relationship that it will ensure compliance with the company’s code of conduct and, as necessary, a prevention action plan, including by seeking corresponding contractual assurances from its partners, to the extent that their activities are part of the company’s value chain (contractual cascading). When such contractual assurances are obtained, paragraph 4 shall apply; | (b) obtain contractual assurances based on fair, reasonable and non-discriminatory terms, or other assurances within business relationships throughout the value chain, with respect to the implementation of a prevention action plan; |
| (c) make necessary investments, such as into management or production processes and infrastructures, to comply with paragraph 1; | (c) make necessary investments, such as into management or production processes, capacity building, joint prevention and mitigation measures with value chain partners, infrastructures and product traceability; |
| (c a) adapt business models and strategies in order to prevent and address potential adverse impacts; | |
| (c b) train, communicate or collaborate with suppliers on the enforcement of relevant protective laws; | |
| (d) provide targeted and proportionate support for an SME with which the company has an established business relationship, where compliance with the code of conduct or the prevention action plan would jeopardise the viability of the SME; | (d) consider providing targeted and proportionate support for an SME with which the company has a business relationship, where compliance with the code of conduct or the prevention action plan would jeopardise the viability of the SME; |
| (e) in compliance with Union law including competition law, collaborate with other entities, including, where relevant, to increase the company’s ability to bring the adverse impact to an end, in particular where no other action is suitable or effective. | (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; |
| (ea) in case of companies detaining shares, exercise their voting rights with a view to prevent adverse impacts on human rights, the environment and on the rule of law and good governance; | |
| (eb) carry out gender-sensitive human rights assessments, including by gathering and using disaggregated data. | |
| 3. As regards potential adverse impacts that could not be prevented or adequately mitigated by the measures in paragraph 2, the company may seek to conclude a contract with a partner with whom it has an indirect relationship, with a view to achieving compliance with the company’s code of conduct or a prevention action plan. When such a contract is concluded, paragraph 4 shall apply. | 3. As regards potential adverse impacts that could not be prevented or adequately mitigated by the measures in paragraph 2, the company may seek to conclude a contract with a partner with whom it has an indirect relationship, with a view to achieving compliance with the company’s code of conduct or a prevention action plan. When such a contract is concluded, paragraph 4 shall apply. |
| 4. The contractual assurances or the contract shall be accompanied by the appropriate measures to verify compliance. For the purposes of verifying compliance, the company may refer to suitable industry initiatives or independent third-party verification. | 4. The contractual assurances or the contract shall be accompanied by the appropriate measures to verify compliance. For the purposes of verifying compliance, the company may refer to suitable industry initiatives or independent third-party verification. Compliance verification through industry initiatives or independent third-party verification shall not exonerate the company from its obligations and its liability under this Directive. |
| When contractual assurances are obtained from, or a contract is entered into, with an SME, 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. | When contractual assurances are obtained from, or a contract is entered into, with an SME, 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. |
| 5. As regards potential adverse impacts within the meaning of paragraph 1 that could not be prevented or adequately mitigated by the measures in paragraphs 2, 3 and 4, 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: | 5. As regards potential adverse impacts within the meaning of paragraph 1 that could not be prevented or adequately mitigated by the measures in paragraphs 2, 3 and 4, because mitigation is not possible or acceptable, or there is no reasonable prospect of change, companies shall 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. |
| In such cases, companies shall take the following actions: | |
| (a) temporarily suspend commercial relations with the partner in question, while pursuing prevention and minimisation efforts, if there is reasonable expectation that these efforts will succeed in the short-term; | (a) suspend commercial relations with the partner in question, while pursuing prevention and mitigation efforts; |
| (b) terminate the business relationship with respect to the activities concerned if the potential adverse impact is severe. | (b) terminate the business relationship with respect to the activities concerned if the potential adverse impact is severe or if the adverse impact is repeated. |
| Companies shall engage in a timely manner, efficiently and meaningfully with stakeholders impacted by the decision to suspend or terminate the business relationship before making that decision, and shall address the adverse impacts derived from those actions. | |
| Undertakings shall take appropriate measures to prevent, mitigate and bring to an end adverse impacts deriving from the suspension or cessation of the business relationship. | |
| The termination of a business relationship shall not bear on a company’s responsibility to address the actual impacts generated in the course of the duration of the relationship. | |
| Member States shall provide for the availability of an option to terminate the business relationship in contracts governed by their laws. | Member States shall provide for the availability of an option to suspend or to terminate the business relationship in contracts governed by their laws. |
| 6. By way of derogation from paragraph 5, point (b), when companies referred to in Article 3, point (a)(iv), provide credit, loan or other financial services, they shall not be required to terminate the credit, loan or other financial service contract when this can be reasonably expected to cause substantial prejudice to the entity to whom that service is being provided. | 6. By way of derogation from paragraph 5, point (b), when companies referred to in Article 3, point (a)(iv), provide credit, loan or other financial services, they shall not be required to terminate the credit, loan or other financial service contract when this can be reasonably expected to cause substantial prejudice to the entity to whom that service is being provided. |
Amendment 88
Proposal for a directive
Article 8
| Text proposed by the Commission | Amendment |
|---|---|
| Article 8 | Article 8 |
| Bringing actual adverse impacts to an end | Mitigating and bringing actual adverse impacts to an end |
| 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 paragraphs 2 to 6 of this Article. | 1. Member States shall ensure that companies take appropriate measures to mitigate and to bring actual adverse impacts that have been, or should have been, occurring in their own activities and in their value chain and identified pursuant to Article 6 to an end using a risk-based approach, in accordance with paragraphs 2 to 6 of this Article. |
| 2. Where the adverse impact cannot be brought to an end, Member States shall ensure that companies minimise the extent of such an impact. | 2. Where the adverse impact cannot be brought to an end, Member States shall ensure that companies minimise such impact to the greatest extent possible. |
| 3. Companies shall be required to take the following actions, where relevant: | 3. Companies shall be required to take the following actions, where relevant: |
| (a) neutralise the adverse impact or minimise its extent, including by the payment of damages to the affected persons and of financial compensation to the affected communities. The action shall be proportionate to the significance and scale of the adverse impact and to the contribution of the company’s conduct to the adverse impact; | (a) take all appropriate measures to fully remediate or contribute to the full remediation of the adverse impact or minimise it, to the greatest extent possible by appropriate remedies, including by the payment of damages and of financial compensation to affected persons, groups of persons or communities and the full compensation of the environmental damage or harm to the rule of law and good governance systems. In the event of payment of damages or financial compensation by companies for adverse impacts resulting from their business partners’ conduct, companies shall benefit from legal assurance to obtain compensation from those partners. The action shall be proportionate to the significance and scale of the adverse impact and to the contribution of the company’s conduct to the adverse impact. Remediation includes a range of substantive forms the aim of which will be to counteract or make good any harm to human rights, the environment as well as rule of law and good governance. It concerns any harm and damage a company caused or contributed to by acts or omissions; it includes apologies, restitution, rehabilitation, financial or non-financial compensation, restoration of the environment and sanctions, as well as the prevention of harm through, for example, injunctions or guarantees of non-repetition; |
| (a a) in the case of indigenous peoples, remediation actions shall follow international standards, as acknowledged by the United Nations Declaration on the Rights of Indigenous Peoples, and includes actions to seek the restitution of their lands, territories and resources; | |
| (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 action and qualitative and quantitative indicators for measuring improvement. Where relevant, the corrective action plan shall be developed in consultation with stakeholders; | (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 and measures with reasonable and clearly defined timelines for action and qualitative and quantitative indicators for measuring improvement. The corrective action plan shall be developed with the meaningful engagement of stakeholders, and shall be made publicly available. The action shall be proportionate to the significance and scale of the adverse impact and to the contribution of the company’s conduct to the adverse impact; |
| (b a) the appropriate measures shall apply, where applicable, to a company’s own operations, its subsidiaries as well as direct and indirect business relationships; | |
| (b b) adapt processes, operations and projects; | |
| (b c) if necessary, cease processes, operations and projects; | |
| (c) seek contractual assurances from a direct partner with whom it has an established business relationship that it will ensure compliance with the code of conduct and, as necessary, a corrective action plan, including by seeking corresponding contractual assurances from its partners, to the extent that they are part of the value chain (contractual cascading). When such contractual assurances are obtained, paragraph 5 shall apply. | (c) obtain contractual assurances from a direct partner with whom it has a business relationship that it will: |
| (i) respect human rights, worker’s rights, the environment and rule of law and good governance and will implement the prevention plan; | |
| (ii) ensure compliance with the code of conduct and, as necessary, a corrective action plan; and | |
| (iii) inform workers and other stakeholders of the grievance mechanisms, established by the company or in which the company participates, under Article 9, including by obtaining corresponding contractual assurances from its partners, to the extent that they are part of the value chain (contractual cascading); when such contractual assurances are obtained, paragraph 5 shall apply; | |
| (d) make necessary investments, such as into management or production processes and infrastructures to comply with paragraphs 1, 2 and 3; | (d) make necessary investments, such as into management or production processes, and infrastructures, product traceability as well as capacity building, joint remediation and mitigation plans with value chain partners, to comply with paragraphs 1, 2 and 3; |
| (d a) adapt business models and strategies; | |
| (e) provide targeted and proportionate support for an SME with which the company has an established business relationship, where compliance with the code of conduct or the corrective action plan would jeopardise the viability of the SME; | (e) provide targeted and proportionate support for an SME with which the company has a business relationship, where compliance with the code of conduct or the corrective action plan would jeopardise the viability of the SME; |
| (f) in compliance with Union law including competition law, collaborate with other entities, including, where relevant, to increase the company’s ability to bring the adverse impact to an end, in particular where no other action is suitable or effective. | (f) 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; |
| (f a) undertakings that detain shares shall exercise their voting rights with a view to prevent adverse impacts on human rights, the environment and rule of law and good governance. | |
| 4. As regards actual adverse impacts that could not be brought to an end or adequately mitigated by the measures in paragraph 3, the company may seek to conclude a contract with a partner with whom it has an indirect relationship, with a view to achieving compliance with the company’s code of conduct or a corrective action plan. When such a contract is concluded, paragraph 5 shall apply. | 4. As regards actual adverse impacts that could not be brought to an end or adequately mitigated by the measures in paragraph 3, the company may seek to conclude a contract with a partner with whom it has an indirect relationship, with a view to achieving compliance with the company’s code of conduct or a corrective action plan. When such a contract is concluded, paragraph 5 shall apply. |
| 5. The contractual assurances or the contract shall be accompanied by the appropriate measures to verify compliance. For the purposes of verifying compliance, the company may refer to suitable industry initiatives or independent third-party verification. | 5. The contractual assurances or the contract shall be accompanied by the appropriate measures to verify compliance. For the purposes of verifying compliance, the company may refer to suitable industry initiatives or independent third-party verification. Compliance verification through industry initiatives or independent third-party verification shall not exonerate the company from its obligations and its liability under this Directive. |
| When contractual assurances are obtained from, or a contract is entered into, with an SME, 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. | When contractual assurances are obtained from, or a contract is entered into, with an SME, 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 associated cost. |
| 6. As regards actual adverse impacts within the meaning of paragraph 1 that could not be brought to an end or the extent of which could not be minimised by the measures provided for in paragraphs 3, 4 and 5, the company shall 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: | 6. As regards actual adverse impacts within the meaning of paragraph 1 that could not be brought to an end or the extent of which could not be minimised by the measures provided for in paragraphs 3, 4 and 5, the company shall 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 take one of the following actions: |
| (a) temporarily suspend commercial relationships with the partner in question, while pursuing efforts to bring to an end or minimise the extent of the adverse impact, or | (a) temporarily suspend commercial relationships with the partner in question, while pursuing efforts to bring to an end or minimise the extent of the adverse impact, or |
| (b) terminate the business relationship with respect to the activities concerned, if the adverse impact is considered severe. | (b) terminate the business relationship with respect to the activities concerned, if the adverse impact is considered severe or if the adverse impact is repeated. |
| Member States shall provide for the availability of an option to terminate the business relationship in contracts governed by their laws. | Member States shall provide for the availability of an option to suspend or to terminate the business relationship in contracts governed by their laws. |
| Companies shall engage in a timely, efficient and meaningful manner with stakeholders impacted by the decision to suspend or terminate the business relationship before making that decision, and shall address the adverse impacts derived from those actions. | |
| 7. By way of derogation from paragraph 6, point (b), when companies referred to in Article 3, point (a)(iv), provide credit, loan or other financial services, they shall not be required to terminate the credit, loan or other financial service contract, when this can be reasonably expected to cause substantial prejudice to the entity to whom that service is being provided. | 7. By way of derogation from paragraph 6, point (b), when companies referred to in Article 3, point (a)(iv), provide credit, loan, statutory insurance cover or other financial services, they shall not be required to terminate the credit, loan or other financial service contract, when this can be reasonably expected to cause substantial prejudice to the entity to whom that service is being provided. |
Amendment 89
Proposal for a directive
Article 8 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| Article 8a | |
| Responsible Disengagement | |
| 1. Member States shall ensure that companies disengage responsibly, and only as a last resort, when responding to situations where potential and adverse impacts within the meaning of Article 7(1) and Article 8(1) cannot be prevented, brought to an end, or otherwise effectively mitigated or meaningfully minimized according to the views of affected stakeholders, in particular workers, or other stakeholders with a legitimate interest. To this end, companies shall meaningfully engage with stakeholders in accordance with Article 9a, before taking a decision. | |
| 2. Companies shall disclose as part of their reporting obligation as referred to in Article 11, the number of instances where they have decided to disengage, the reason for that disengagement and the location of the concerned business relationships without disclosing their identity. |
Amendment 90
Proposal for a directive
Article 9
| Text proposed by the Commission | Amendment |
|---|---|
| Article 9 | Article 9 |
| Complaints procedure | Non-judicial grievance mechanisms |
| 1. Member States shall ensure that companies provide the possibility for persons and organisations listed in paragraph 2 to submit complaints to them where they have legitimate concerns regarding actual or potential adverse human rights impacts and adverse environmental impacts with respect to their own operations, the operations of their subsidiaries and their value chains. | 1. Member States shall ensure that companies establish or participate in effective grievance mechanisms at operational level, both as an early-warning risk-awareness and as a remediation system, that can be used by persons and organisations listed in paragraph 2 to raise grievances and request remedies where they have legitimate concerns regarding actual or potential adverse human rights impacts and adverse environmental impacts or adverse impacts on the rule of law and good governance systems 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 mechanisms through collaborative arrangements with other companies or organisations, by participating in multi-stakeholder grievance mechanisms or joining a global framework agreement. | |
| Member States shall ensure that grievance mechanisms are public, locally accessible, predictable, safe, equitable, context appropriate, transparent, rights-compatible, and adaptable as set out in the effectiveness criteria for non-judicial grievance mechanisms in Principle 31 of the United Nations Guiding Principles on Business and Human Rights and the United Nations Committee on the Rights of the Child General Comment No 16. Such mechanisms shall provide for the possibility to raise concerns either anonymously or confidentially, as appropriate, in accordance with national law. They shall take particular care in protecting against retaliation, and in particular, in ensuring that these proceedings are fully accessible for indigenous peoples. | |
| Member States shall ensure that actual and potentially affected rights holders and other stakeholders participate in the design and evaluation of such grievance mechanisms and in the provision of remedies. | |
| Member States shall ensure that companies provide information to actual and potentially affected rightholders and other stakeholders on such grievance mechanisms, including on how to access them, decisions and remedies relating to a company and how the company is implementing them. All information shall be published in a manner that does not endanger the stakeholders’ safety, including by not disclosing their identity. | |
| Grievance mechanisms shall have the right to propose solutions to the companies on how potential or actual adverse impacts may be addressed. | |
| 2. Member States shall ensure that the complaints may be submitted by: | 2. Member States shall ensure that the grievances may be raised by: |
| (a) persons who are affected or have reasonable grounds to believe that they might be affected by an adverse impact, | (a) individuals, groups, communities or entities who are affected or have reasonable grounds to believe that they might be affected by an adverse impact, |
| (b) trade unions and other workers’ representatives representing individuals working in the value chain concerned, | (b) trade unions and other workers’ representatives, |
| (c) civil society organisations active in the areas related to the value chain concerned. | (c) civil society organisations, human rights, environmental, rule of law and good governance defenders as well as victims and witnesses of corruption, |
| (c a) other persons having a sufficient interest or maintaining the impairment of a right, | |
| (c b) business partners that are unable to fulfil the requirements of contractual assurances as referred to in Article 7(2), point (b), and Article 8(3), point (c), due to unfair purchasing practices of their buyers. | |
| 3. Member States shall ensure that the companies establish a procedure for dealing with complaints referred to in paragraph 1, including a procedure when the company considers the complaint to be unfounded, and inform the relevant workers and trade unions of those procedures. Member States shall ensure that where the complaint is well-founded, the adverse impact that is the subject matter of the complaint is deemed to be identified within the meaning of Article 6. | 3. Member States shall ensure that the companies establish a procedure for dealing with grievances referred to in paragraph 1, including a procedure when the company considers the grievance to be unfounded, and inform all relevant stakeholders, including workers and trade unions, of those procedures. Member States shall ensure that where the grievance is well-founded, the adverse impact that is the subject matter of the grievance is deemed to be identified within the meaning of Article 6. The company shall publicly report on how grievances are taken into account in identifying and responding to risks or violations, including inter alia statistics about the grievance received, the types of adverse impacts referred to, their treatment by companies and the publication of processed and anonymised cases. |
| 4. Member States shall ensure that complainants are entitled | 4. Member States shall ensure that complainants and their representatives are entitled: |
| (a) to request appropriate follow-up on the complaint from the company with which they have filed a complaint pursuant to paragraph 1, and | (a) to receive timely, transparent, effective, appropriate follow-up in writing on the grievance, from the grievance mechanism with which they have filed a grievance pursuant to paragraph 1, providing substantiated and accessible reasoning as to whether the claim has been considered unfounded or founded; |
| (a a) to receive guarantees of non-retaliation, confidentiality and anonymity for all actual and potentially affected stakeholders; | |
| (a b) to receive timely and effective information on the steps and actions taken in the context of a specific grievance filed through the independent grievance mechanism; | |
| (b) to meet with the company’s representatives at an appropriate level to discuss potential or actual severe adverse impacts that are the subject matter of the complaint. | (b) to engage with the grievance mechanisms directly and with the company’s representatives at an appropriate level to discuss potential or actual adverse impacts that are the subject matter of the grievance, including guarantees of non-retaliation, confidentiality and anonymity when requested and propose appropriate remedy; |
| (b a) to request that companies fully remediate or contribute to the full remediation of actual adverse impacts. The remedy shall be proportionate to the significance and scale of the adverse impact; | |
| (b b) to receive in writing a timely and substantiated reply from the company to a legitimate request for remediation. | |
| 4a. Member States shall ensure that recourse to a grievance mechanism does not preclude the claimants from having access to the substantiated concerns procedure referred to in Article 19, to the civil liability referred to in Article 22, or to any other judicial mechanism or other non-judicial grievance mechanism. Member States shall also ensure that the right to resort to the judicial bodies and courts is not conditional on the prior use of the grievance mechanism. Member States shall ensure that any non-judicial remediation efforts are in parallel to encouraging collective bargaining and recognition of trade unions and should by no means undermine the role of legitimate trade unions in addressing labour-related disputes. |
Amendment 91
Proposal for a directive
Article 10 – paragraph 1
| Text proposed by the Commission | Amendment |
|---|---|
| Member States shall ensure that companies carry out periodic assessments of their own operations and measures, those of their subsidiaries and, where related to the value chains of the company, those of their established business relationships, to monitor the effectiveness of the identification, prevention, mitigation, bringing to an end and minimisation of the extent of human rights and environmental adverse impacts. Such assessments shall be based, where appropriate, on qualitative and quantitative indicators and be carried out at least every 12 months and whenever there are reasonable grounds to believe that significant new risks of the occurrence of those adverse impacts may arise. The due diligence policy shall be updated in accordance with the outcome of those assessments. | Member States shall ensure that companies carry out periodic assessments of their own operations and measures, those of their subsidiaries and, and those of the value chains of the company, those of their business relationships, to monitor the effectiveness of the identification, prevention, mitigation, bringing to an end and minimisation of the extent of adverse human rights, labour rights, environmental and rule of law and good governance impacts. Such assessments shall be based on qualitative and quantitative indicators and be carried out with a meaningful engagement of stakeholders. They shall be conducted at least every 12 months and whenever there are reasonable grounds to believe that significant new risks of the occurrence of those adverse impacts may arise. The due diligence policy, the prevention plan and the corrective action plan shall be updated and the operations and measures modified in accordance with the outcome of those assessments. |
Amendment 92
Proposal for a directive
Article 11
| Text proposed by the Commission | Amendment |
|---|---|
| Article 11 | Article 11 |
| Communicating | Reporting requirements |
| Member States shall ensure that companies that are not subject to reporting requirements under Articles 19a and 29a of Directive 2013/34/EU report on the matters covered by this Directive by publishing on their website an annual statement in a language customary in the sphere of international business. The statement shall be published by 30 April each year, covering the previous calendar year. | Notwithstanding the reporting requirements under Articles 19a and 29a of Directive 2013/34/EU, Member States shall ensure that companies report on the matters covered by this Directive in accordance with Article 4 by publishing on their website in an accessible and timely manner, their due diligence policies, prevention action plans, correction action plans, procedures for dealing with grievances, reports on the outcome of the assessments as well as other relevant information. |
| In particular, Member States shall ensure that companies report on: | |
| (a) actual and potential adverse human rights, labour rights, and environmental, and rule of law and good governance impacts and the actions taken in accordance with Article 4 with respect to particular operations, projects and investments, and those of its value chains in a culturally sensitive and accessible manner taking into account specifics of the stakeholder group including gender. A detailed mapping of the value chains of the company including names, locations, products and services shall be provided; | |
| (b) measures implemented to take into account stakeholders views and interests throughout the due diligence process; | |
| (c) measures implemented as part of their strategies of co-investment to build the capacity of weaker business partners to carry out due diligence; | |
| (d) information on the number of instances where companies have decided to disengage, the reason for this disengagement and the location of the concerned suppliers without disclosing their identity, except where companies deem it acceptable to do so in accordance with applicable laws; | |
| (e) the outcome of the assessments including copies of third-party verification audits and shall inform stakeholders in accordance with Article 11 a. | |
| Member States shall ensure that companies publish and update their due diligence policies promptly once they identify any new actual and potential adverse impacts and at least annually. | |
| The Commission shall adopt delegated acts in accordance with Article 28 concerning the content and criteria for such reporting under paragraph 1, specifying information on the description of due diligence, potential and actual adverse impacts and actions taken on those. | The Commission shall adopt delegated acts in accordance with Article 28 concerning the content and criteria for such reporting under paragraph 1, specifying information on the description of due diligence, its design, methodology potential and actual adverse impacts and actions taken on those, as well as related information in order to support companies, their subsidiaries and business partners operating in developing countries to identify, prevent and effectively address actual or potential adverse impacts on human rights, labour rights, the environment, and on the rule of law and good governance systems. |
| Commission shall also adopt delegated acts on how this reporting can be integrated into the European Single Access Point in order to reduce burden for companies and competent authorities. |
Amendment 93
Proposal for a directive
Article 11 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| Article 11a | |
| Stakeholder engagement | |
| 1. Member States shall ensure that companies engage in a good faith, effectively, safely and meaningfully with stakeholders when fulfilling their obligations pursuant to Articles 4 to 11. Companies shall be required to ensure: | |
| (a) that all stakeholders are engaged regularly and throughout the entire due diligence process, as provided for in Articles 4 to 11; | |
| (b) effective and appropriate modes of engagement according to their size and to the nature and context of their operations and the stakeholders including: appropriate timelines for engagement activities; identifying and addressing potential barriers to participation; adequate protection of stakeholders including from the risk of reprisals, before, during and after engagement; ensuring anonymity, confidentiality and proactively seeking and prioritising the engagement of with the most impacted and vulnerable stakeholders and ensuring a gender-responsive and child-friendly approach; | |
| (c) regular and meaningful information to stakeholders about actual and potential adverse impacts of its actions in a timely, culturally sensitive, and accessible manner taking into account specificities of the stakeholder group; and | |
| (d) in case of significant changes in operations, activities or operating context, they pro-actively communicate and provide complementary and intermediary reporting. | |
| 2. Consultation with indigenous peoples shall be conducted in accordance with international human rights standards, such as those developed in the United Nations Declaration on the Rights of Indigenous Peoples, including the respect for their rights to free, prior and informed consent and their rights to their lands, territories and resources. | |
| 3. Companies shall assess and timely respond to the request for engagement, and to the stakeholder’s request for additional information regarding companies’ actions taken in accordance with Article 4. The information shall be provided in a timely manner, in writing and shall be adequate and comprehensible. | |
| If the company refuses a request for information, it shall provide for adequate and detailed justification in writing and within a reasonable timeframe. In the event the company does not provide sufficient justification, ignores the request, or refuses to disclose. Member States shall ensure that relevant authorities are entitled, to order the disclosure of the information. | |
| 4. Stakeholders shall also be informed by the company on its due diligence policy and on its implementation, to which they shall be able to contribute. | |
| 5. Where the meaningful engagement with stakeholders is not feasible for the company or not safe for stakeholders, other reasonable and credible alternatives shall be considered. |
Amendment 94
Proposal for a directive
Article 13 – paragraph 1
| Text proposed by the Commission | Amendment |
|---|---|
| In order to provide support to companies or to Member State authorities on how companies should fulfil their due diligence obligations, the Commission, in consultation with Member States and stakeholders, the European Union Agency for Fundamental Rights, the European Environment Agency, and where appropriate with international bodies having expertise in due diligence, may issue guidelines, including for specific sectors or specific adverse impacts. | In order to provide support to companies or to Member State authorities on how companies should fulfil their due diligence obligations, the Commission, in consultation with Member States and stakeholders, the European Union Agency for Fundamental Rights, the European Environment Agency, the European Union Agency for Criminal Justice Cooperation (Eurojust), the European Union Agency for Law Enforcement Cooperation (Europol), the European Public Prosecutor’s Office, the European Anti-Fraud Office (OLAF) and where appropriate with international bodies having expertise in due diligence, shall issue guidelines concerning: |
| (a) specific sectors, contexts and areas and in particular high-risk sectors of economic activity leading to severe adverse impacts. The Commission shall draft without delay guidelines on how financial undertakings shall comply with this Directive, including with regard to the concepts of value chain and the risk based approach; | |
| (b) impacts on the rule of law and good governance systems; | |
| (c) gender-responsive and culturally responsive due diligence; | |
| (d)- specific adverse impacts; | |
| (e) implementation of heightened due diligence in conflict-affected and high-risk areas; | |
| (f) safe, effective and meaningful engagement with stakeholders in all due diligence processes; | |
| (g) mapping of companies value chains and efficient process to monitor business partners’ behaviours throughout the value chains; | |
| (h) measures that companies should take to address the challenges faced by smallholders, including access to a living income; | |
| (i) facilitating access to justice for victims and persons, groups of persons and organisations with legitimate interests; | |
| (j) prevention and mitigation of retaliation risks faced by stakeholders including human rights, environmental, rule of law and good governance defenders for their involvement in due diligence processes; | |
| (k) responsible disengagement from harmful business relationships or from a specific area or economic sector; and | |
| (l) cooperation with partner countries’ authorities in order to carry out investigations. | |
| Adherence to the guidelines by companies shall be considered as a prerequisite to fulfil the requirements of this Directive to which the guidelines refer. |
Amendment 95
Proposal for a directive
Article 14
| Text proposed by the Commission | Amendment |
|---|---|
| Article 14 | Article 14 |
| Accompanying measures | Accompanying measures |
| -1. Member States shall provide information and effective support to potentially affected and affected stakeholders, including by means of dedicated websites, platforms or portals, legal counsel and administrative support to claim rights provided to them by this Directive. | |
| 1. Member States shall, in order to provide information and support to companies and the partners with whom they have established business relationships in their value chains in their efforts to fulfil the obligations resulting from this Directive, set up and operate individually or jointly dedicated websites, platforms or portals. Specific consideration shall be given, in that respect, to the SMEs that are present in the value chains of companies. | 1. Member States shall, in order to provide information and support to companies and the partners with whom they have business relationships in their value chains in their efforts to fulfil the obligations resulting from this Directive, set up and operate individually or jointly dedicated websites, platforms or portals. Specific consideration shall be given, in that respect, to the SMEs that are present in the value chains of companies. |
| 2. Without prejudice to applicable State aid rules, Member States may financially support SMEs. | 2. Without prejudice to applicable State aid rules, Member States may financially support SMEs for the purpose of compliance with this Directive. Member States may provide financial support to stakeholders for the purpose of raising their awareness and facilitating access to the rights provided to them by this Directive. |
| 3. The Commission may complement Member States’ support measures building on existing Union action to support due diligence in the Union and in third countries and may devise new measures, including facilitation of joint stakeholder initiatives to help companies fulfil their obligations. | 3. The Commission and Member States shall develop cooperation and partnership mechanisms with third countries to address the root causes of human rights violations, environmental and rule of law and good governance harms and devise new measures. This shall include the facilitation of shared value partnerships as well as of joint stakeholder initiatives to build the capacity of upstream economic actors to help companies fulfil their obligations. |
| 3a. The Commission shall support safe participatory collection of independent data on adverse human rights, environmental, rule of law and good governance impacts and undertake necessary actions for the data to be considered. | |
| 3b. The Commission, in particular in developing countries and in accordance with Regulation (EU) 2021/947 of the European Parliament and of the Council1a, shall provide measures, including financial support, aimed at: | |
| (a) raising awareness and capacity building of stakeholders to ensure their active participation in due diligence processes; | |
| (b) monitoring the implementation of this Directive and the due diligence processes; | |
| (c) supporting access to justice for victims and persons and groups of persons with legitimate interests including the submission of substantiated concerns pursuant to Article 19 to the supervisory authorities; | |
| (d) contribution to the convergence, harmonisation and professionalization of private standard schemes, metrics, monitoring and assessment systems, as well as accounting and reporting formats to ensure credible, gender-sensitive, reliable, actionable and comparable performance data on due diligence. | |
| 4. Companies may rely on industry schemes and multi-stakeholder initiatives to support the implementation of their obligations referred to in Articles 5 to 11 of this Directive to the extent that such schemes and initiatives are appropriate to support the fulfilment of those obligations. The Commission and the Member States may facilitate the dissemination of information on such schemes or initiatives and their outcome. The Commission, in collaboration with Member States, may issue guidance for assessing the fitness of industry schemes and multi-stakeholder initiatives. | 4. Companies may rely on industry schemes and multi-stakeholder initiatives to support the implementation of their obligations referred to in Articles 5 to 11 of this Directive to the extent that such schemes and initiatives are appropriate to support the fulfilment of those obligations. The Commission and the Member States may facilitate the dissemination of information on such schemes or initiatives and their outcome. The Commission, in collaboration with Member States, may issue guidance for assessing the fitness of industry schemes and multi-stakeholder initiatives. The criteria for the assessment of fitness of an industry scheme shall comprise the inclusion of the perspectives of civil society in audits and the steering of the standards and grievance mechanisms according to the effectiveness criteria of the United Nations Guidance Principles on Business and Human Rights. |
| Reliance on industry schemes and multi-stakeholder initiatives shall not absolve the company of its individual responsibility to perform due diligence or prevent it from being held liable for non-compliance with this Directive. | |
| 1a Regulation (EU) 2021/947 of the European Parliament and of the Council of 9 June 2021 establishing the Neighbourhood, Development and International Cooperation Instrument – Global Europe, amending and repealing Decision No 466/2014/EU of the European Parliament and of the Council and repealing Regulation (EU) 2017/1601 of the European Parliament and of the Council and Council Regulation (EC, Euratom) No 480/2009 (OJ L 209, 14.6.2021, p. 1). |
Amendment 96
Proposal for a directive
Article 15 – paragraph 1
| Text proposed by the Commission | Amendment |
|---|---|
| 1. Member States shall ensure that companies referred to in Article 2(1), point (a), and Article 2(2), point (a), shall adopt a plan to ensure that the business model and strategy of the company are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement. This plan shall, in particular, identify, on the basis of information reasonably available to the company, the extent to which climate change is a risk for, or an impact of, the company’s operations. | 1. Member States shall ensure that companies develop, adopt and effectively implement a plan, in consultation with trade unions, workers’ representatives and stakeholders, to ensure that the business model and strategy of the company are aligned with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement and the objective of achieving climate neutrality by 2050 as established in Regulation (EU) 2021/1119. That plan shall: |
| (a) be evidence based and regularly updated in line with the best available science; | |
| (b) take into account the entire value chain and address scope 1, 2 and 3 emissions; | |
| (c) define short term and medium term absolute reduction targets for 2025 and 2030, reviewed every five years up to 2050, explaining their alignment with a 1.5 °C climate scenario with no or limited overshoot and whether such targets are based on science, pursuant to the latest recommendations of the IPCC and the European Scientific Advisory Board on Climate Change; | |
| (d) define implementing actions for each scope and target, associated with an explanation of decarbonisation levers identified; | |
| (e) define and commit to the financial and investments plans designed to reach the targets. |
Amendment 97
Proposal for a directive
Article 15 – paragraph 2
| Text proposed by the Commission | Amendment |
|---|---|
| 2. Member States shall ensure that, in case climate change is or should have been identified as a principal risk for, or a principal impact of, the company’s operations, the company includes emission reduction objectives in its plan. | deleted |
Amendment 98
Proposal for a directive
Article 15 – paragraph 3
| Text proposed by the Commission | Amendment |
|---|---|
| 3. Member States shall ensure that companies duly take into account the fulfilment of the obligations referred to in paragraphs 1 and 2 when setting variable remuneration, if variable remuneration is linked to the contribution of a director to the company’s business strategy and long-term interests and sustainability. | deleted |
Amendment 99
Proposal for a directive
Article 15 – paragraph 3 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| 3a. Member States shall ensure that directors are directly and personally responsible for overseeing the obligations set out in paragraph 1. |
Amendment 100
Proposal for a directive
Article 17 – paragraph 7
| Text proposed by the Commission | Amendment |
|---|---|
| 7. The Commission shall make publicly available, including on its website, a list of the supervisory authorities. The Commission shall regularly update the list on the basis of the information received from the Member States. | 7. The Commission shall make publicly available, including on its website, a list of the supervisory authorities, and, when applicable, the respective competences of those authorities. The Commission shall regularly update the list on the basis of the information received from the Member States. |
Amendment 101
Proposal for a directive
Article 17 – paragraph 8 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| 8a. Member States shall ensure that the supervisory authorities have the qualifications, expertise and skills in human rights, labours rights, environment, and rule of law and good governance to effectively perform their duties and exercise their powers. |
Amendment 102
Proposal for a directive
Article 17 – paragraph 8 b (new)
| Text proposed by the Commission | Amendment |
|---|---|
| 8b. Member States shall ensure that supervisory authorities publish and make available an annual report detailing their past activities, future work plan and priorities. That includes reporting on closed investigations and their results, potential sanctions or other decisions on investigations. |
Amendment 103
Proposal for a directive
Article 18
| Text proposed by the Commission | Amendment |
|---|---|
| Article 18 | Article 18 |
| Powers of supervisory authorities | Powers of supervisory authorities |
| 1. Member States shall ensure that the supervisory authorities have adequate powers and resources to carry out the tasks assigned to them under this Directive, including the power to request information and carry out investigations related to compliance with the obligations set out in this Directive. | 1. Member States shall ensure that the supervisory authorities have adequate powers and resources to carry out the tasks assigned to them under this Directive, including the power to require undertakings to provide all necessary information and carry out investigations, which can include, where appropriate, field visits related to compliance with the obligations set out in this Directive. |
| 2. A supervisory authority may initiate an investigation on its own motion or as a result of substantiated concerns communicated to it pursuant to Article 19, where it considers that it has sufficient information indicating a possible breach by a company of the obligations provided for in the national provisions adopted pursuant to this Directive. | 2. A supervisory authority may initiate an investigation on its own motion or as a result of substantiated concerns communicated to it pursuant to Article 19. |
| 3. Inspections shall be conducted in compliance with the national law of the Member State in which the inspection is carried out and with prior warning to the company, except where prior notification hinders the effectiveness of the inspection. Where, as part of its investigation, a supervisory authority wishes to carry out an inspection on the territory of a Member State other than its own, it shall seek assistance from the supervisory authority in that Member State pursuant to Article 21(2). | 3. Inspections shall be conducted in compliance with the national law of the Member State in which the inspection is carried out and without prior warning to the company. Where, as part of its investigation, a supervisory authority wishes to carry out an inspection on the territory of a Member State other than its own, it shall seek assistance from the supervisory authority in that Member State pursuant to Article 21(2) |
| 4. If, as a result of the actions taken pursuant to paragraphs 1 and 2, a supervisory authority identifies a failure to comply with national provisions adopted pursuant to this Directive, it shall grant the company concerned an appropriate period of time to take remedial action, if such action is possible. | 4. If, as a result of the actions taken pursuant to paragraphs 1 and 2, a supervisory authority identifies a failure to comply with national provisions adopted pursuant to this Directive, it shall grant the company concerned an appropriate period of time to take remedial action, if such action is possible. |
| Taking remedial action does not preclude the imposition of administrative sanctions or the triggering of civil liability in case of damages, in accordance with Articles 20 and 22, respectively. | Taking remedial action does not preclude the imposition of administrative sanctions or the triggering of civil liability including in case of damages, or in accordance with Articles 20 and 22, respectively. |
| 5. When carrying out their tasks, supervisory authorities shall have at least the following powers: | 5. When carrying out their tasks, supervisory authorities shall have at least the following powers: |
| (a) to order the cessation of infringements of the national provisions adopted pursuant to this Directive, abstention from any repetition of the relevant conduct and, where appropriate, remedial action proportionate to the infringement and necessary to bring it to an end; | (a) to order the cessation of infringements of the national provisions adopted pursuant to this Directive, abstention from any repetition of the relevant conduct and, where possible, remedial action proportionate to the infringement and necessary to bring it to an end; |
| (b) to impose pecuniary sanctions in accordance with Article 20; | (b) to impose effective, proportionate and dissuasive pecuniary sanctions in accordance with Article 20; |
| (c) to adopt interim measures to avoid the risk of severe and irreparable harm. | (c) to adopt interim measures to avoid the risk of severe and irreparable harm. |
| 6. Where the legal system of the Member State does not provide for administrative sanctions, this Article and Article 20 may be implemented in such a manner that the sanction is initiated by the competent supervisory authority and imposed by the competent national courts, while ensuring that those legal remedies are effective and have an equivalent effect to the administrative sanctions imposed by supervisory authorities. | 6. Where the legal system of the Member State does not provide for administrative sanctions, this Article and Article 20 shall be implemented in such a manner that the sanction is initiated by the competent supervisory authority and imposed by the competent national courts, while ensuring that those legal remedies are effective and have an equivalent effect to the administrative sanctions imposed by supervisory authorities |
| 7. Member States shall ensure that each natural or legal person has the right to an effective judicial remedy against a legally binding decision by a supervisory authority concerning them. | 7. Member States shall ensure that each natural or legal person has the right to an effective judicial remedy against a legally binding decision by a supervisory authority concerning them. |
| 7a. Member States shall ensure that decisions of supervisory authorities regarding a company’s compliance with the Directive shall be without prejudice to the company’s civil liability under Article 22. |
Amendment 104
Proposal for a directive
Article 19 – paragraph 1
| Text proposed by the Commission | Amendment |
|---|---|
| 1. Member States shall ensure that natural and legal persons are entitled to submit substantiated concerns to any supervisory authority when they have reasons to believe, on the basis of objective circumstances, that a company is failing to comply with the national provisions adopted pursuant to this Directive (‘substantiated concerns’). | 1. Member States shall ensure that natural and legal persons are entitled to submit substantiated concerns to any supervisory authority when they have reasons to believe, on the basis of objective circumstances, that a company is failing to comply with the national provisions adopted pursuant to this Directive (‘substantiated concerns’), without prejudice to any legal action that any natural and legal persons may initiate in accordance with Article 22. |
Amendment 105
Proposal for a directive
Article 19 – paragraph 1 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| 1a. Member States shall ensure that the identity of the natural or legal person submitting substantiated concerns is protected upon request of the person concerned or by the supervisory authority of its own initiative. |
Amendment 106
Proposal for a directive
Article 20
| Text proposed by the Commission | Amendment |
|---|---|
| Sanctions | Sanctions |
| 1. Member States shall lay down the rules on sanctions applicable to infringements of national provisions adopted pursuant to this Directive, and shall take all measures necessary to ensure that they are implemented. The sanctions provided for shall be effective, proportionate and dissuasive. | 1. Member States shall lay down the rules on sanctions applicable to infringements of national provisions adopted pursuant to this Directive, and shall take all measures necessary to ensure that they are implemented. The sanctions provided for shall be effective, proportionate and dissuasive. |
| 1 a. Member States shall provide for at least the following administrative measures and sanctions within their national law: | |
| (a) a public statement indicating the natural person or the legal entity responsible, including the company directors, and the nature of the infringement; | |
| (b) exclusion from entitlement to public benefits or aid; | |
| (c) temporary or permanent exclusion from access to public funding, including tender procedures, grants and concessions; and | |
| (d) temporary or permanent disqualification from the carrying out of commercial activities. | |
| 2. In deciding whether to impose sanctions and, if so, in determining their nature and appropriate level, due account shall be taken of the company’s efforts to comply with any remedial action required of them by a supervisory authority, any investments made and any targeted support provided pursuant to Articles 7 and 8, as well as collaboration with other entities to address adverse impacts in its value chains, as the case may be. | 2. In deciding whether to impose sanctions and, if so, in determining their nature and appropriate level, due account shall be taken of: |
| (a) the company’s efforts to comply with any remedial action required of them by a supervisory authority; | |
| (b) any investments made and any targeted support provided pursuant to Articles 7 and 8; | |
| (c) collaboration with other entities to address adverse impacts in its value chains, as the case may be; | |
| (d) the severity and duration of the infringement by the company, or the severity of the impacts that have occurred; | |
| (e) any previous infringements by the company; | |
| (f) the financial benefits gained or losses avoided by the company due to the infringement, if the relevant data are available; | |
| (g) penalties imposed in respect of the same infringement in other Member States; | |
| (h) the degree to which the company has dealt with complaints or proposals raised by relevant stakeholders, including through grievance mechanisms pursuant to Article 9; | |
| (i) any other aggravating or mitigating factors applicable to the circumstances of the case. | |
| 3. When pecuniary sanctions are imposed, they shall be based on the company’s turnover. | 3. When pecuniary sanctions are imposed, they shall be proportional to the company’s turnover. |
| 4. Member States shall ensure that any decision of the supervisory authorities containing sanctions related to the breach of the provisions of this directive is published. | 4. Member States shall ensure that any decision of the supervisory authorities containing sanctions related to the breach of the provisions of this directive is published and publicly available no later than a month after the sanction is imposed. This should include the methodology and criteria adopted for applying sanctions. |
Amendment 107
Proposal for a directive
Article 21 – paragraph 1 – subparagraph 2 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| The Network shall set up a public database listing all companies subject to this Directive. Member States should cooperate with the supervisory authorities in order to identify all non-Union companies covered by this Directive. | |
| The list of companies shall link each company’s name to the statement published pursuant to Article 11 or otherwise display that the company has not published a statement. | |
| The Network shall set up a public database of high-risk areas. Each entry concerning a high-risk area shall contain a description of the specific risks that area is subject to and relevant documentation on those risks. |
Amendment 108
Proposal for a directive
Article 22
| Text proposed by the Commission | Amendment |
|---|---|
| Artile 22 | Article 22 |
| Civil liability | Civil liability |
| -1. Member States shall ensure that companies are strictly liable for damages arising from any adverse impact resulting from their own operations, products or service and from the operations, products or services of their subsidiaries. | |
| 1. Member States shall ensure that companies are liable for damages if: | 1. Member States shall ensure that companies are liable for damages arising from any adverse impact resulting from their partners’ operations, products or services if: |
| (a) they failed to comply with the obligations laid down in Articles 7 and 8 and; | (a) they failed to comply with the obligations laid down in this Directive and; |
| (b) as a result of this failure an adverse impact that should have been identified, prevented, mitigated, brought to an end or its extent minimised through the appropriate measures laid down in Articles 7 and 8 occurred and led to damage. | (b) an adverse impact that should have been identified, prevented, mitigated, brought to an end or its extent minimised through the appropriate measures laid down in this Directive occurred and led to damage. |
| 1 a. Notwithstanding paragraphs -1 and 1, where the damage results from adverse impacts caused by business relationships within a company’s value chain, Member States shall ensure that the company is held liable, unless it proves that it acted with due care and implemented all appropriate measures to ensure that the damage would not occur. | |
| 2. Notwithstanding paragraph 1, Member States shall ensure that where a company has taken the actions referred to in Article 7(2), point (b) and Article 7(4), or Article 8(3), point (c), and Article 8(5), it shall not be liable for damages caused by an adverse impact arising as a result of the activities of an indirect partner with whom it has an established business relationship, unless it was unreasonable, in the circumstances of the case, to expect that the action actually taken, including as regards verifying compliance, would be adequate to prevent, mitigate, bring to an end or minimise the extent of the adverse impact. | 2. Notwithstanding paragraph 1, Member States shall ensure that any person or group of persons with a legitimate interest may be entitled to obtain from companies the full extent of damages resulting from any adverse impact. Member States shall ensure that companies shall benefit from a legal assurance to obtain compensation from their subsidiaries and the partners with whom they have a business relationship and who are responsible for the adverse impact. |
| In the assessment of the existence and extent of liability under this paragraph, due account shall be taken of the company’s efforts, insofar as they relate directly to the damage in question, to comply with any remedial action required of them by a supervisory authority, any investments made and any targeted support provided pursuant to Articles 7 and 8, as well as any collaboration with other entities to address adverse impacts in its value chains. | deleted |
| 2a. Member States shall ensure that liability regimes put in place pursuant to this Article address existing barriers to access to justice and in particular: | |
| (a) allow for collective redress; | |
| (b) allow for representative actions by organisations acting on behalf of and for the protection of the collective interests of victims; | |
| (c) ensure that the costs of the proceedings based on provisions of national law transposing this Directive do not prevent claimants from having access to courts; and | |
| (d) establish reasonable and appropriate limitation periods for claimants or groups of claimants to bring cases to competent courts. | |
| 2b. Member States shall apply suspension of limitation periods for the duration of procedures linked to complaints submitted through grievance mechanisms pursuant to Article 9, to actions taken by supervisory authorities in accordance with Article 18 and to substantiated concerns submitted to supervisory authorities pursuant to Article 19. The suspension shall end at the earliest one year after the decision of the supervisory authority. | |
| 2c. Where claimants have provided reasonably available evidence sufficient to support their action in accordance with paragraph 1, Member States shall ensure that courts may order the defendant and third parties to provide evidence in their control, if requested by the claimant and in accordance with national procedural law, subject to the applicable Union and national rules on confidentiality and proportionality. | |
| 3. The civil liability of a company for damages arising under this provision shall be without prejudice to the civil liability of its subsidiaries or of any direct and indirect business partners in the value chain. | 3. The civil liability of a company for damages arising under this provision shall be without prejudice to the joint and several civil liability of its subsidiaries or of any direct and indirect business partners in the value chain. |
| 4. The civil liability rules under this Directive shall be without prejudice to Union or national rules on civil liability related to adverse human rights impacts or to adverse environmental impacts that provide for liability in situations not covered by or providing for stricter liability than this Directive. | 4. The civil liability rules under this Directive shall be without prejudice to Union or national rules on civil liability related to adverse human rights and labour rights impacts, to adverse environmental impacts or adverse rule of law and good governance impacts that provide for liability in situations not covered by or providing for stricter liability than this Directive. |
| 4a. Member States shall take the necessary measures, in accordance with their national judicial systems, to ensure that, where persons who consider themselves wronged by failure to apply due diligence responsibilities establish, before a court or other competent body, facts from which it can be presumed that there has been a direct or indirect breach of the due diligence responsibilities, it shall be for the respondent to prove that the company’s action was adequate under the circumstances of the case. | |
| 5. Member States shall ensure that the liability provided for in provisions of national law transposing this Article is of overriding mandatory application in cases where the law applicable to claims to that effect is not the law of a Member State. | 5. Member States shall ensure that the liability provided for in provisions of national law transposing this Article is of overriding mandatory application in cases where the law applicable to claims to that effect is not the law of a Member State. |
Amendment 109
Proposal for a directive
Article 23
| Text proposed by the Commission | Amendment |
|---|---|
| Article 23 | Article 23 |
| Reporting of breaches and protection of reporting persons | Reporting of breaches and protection of reporting persons |
| Directive (EU) 2019/1937 shall apply to the reporting of all breaches of this Directive and the protection of persons reporting such breaches. | Directive (EU) 2019/1937 shall apply to the reporting of all breaches of this Directive and the protection of persons reporting such breaches. |
| Member States shall ensure that companies refrain from retaliation against any stakeholders and their representatives for exercising their rights under this Directive, and shall identify, prevent, mitigate and monitor the risk of retaliation and reprisal, related to their business relationships and their value chains. | |
| Member States shall ensure that companies are liable for retaliation actions against stakeholders and their representatives, including whistle-blowers and human rights, environmental, rule of law and good governance defenders, taken by themselves or by actors mandated to do so. | |
| Member States shall take the necessary measures to ensure that all stakeholder engagement procedures, and in particular those set in place to raise complaints or concerns, shall allow the confidentiality of those concerns, as well as the anonymity and safety and physical and legal integrity of all stakeholders and complainants, including human rights, labour rights and environmental and rule of law and good governance defenders. In the event that such procedures concern whistle-blowers, those procedures should be in line with Directive (EU) 2019/1937. |
Amendment 110
Proposal for a directive
Article 25 – paragraph 1
| Text proposed by the Commission | Amendment |
|---|---|
| 1. Member States shall ensure that, when fulfilling their duty to act in the best interest of the company, directors of companies referred to in Article 2(1) take into account the consequences of their decisions for sustainability matters, including, where applicable, human rights, climate change and environmental consequences, including in the short, medium and long term. | 1. Member States shall ensure that, when fulfilling their duty to act in the best interest of the company, directors of companies referred to in Article 2(1) take into account the consequences of their decisions for sustainability matters, including, where applicable, human rights, climate change and environmental consequences, as well as impacts on the rule of law and good governance systems of the countries, regions or territories where the company, its subsidiaries or partners in the supply chain perform their operations, including in the short, medium and long term. |
Amendment 111
Proposal for a directive
Article 26
| Text proposed by the Commission | Amendment |
|---|---|
| Article 26 | Article 26 |
| Setting up and overseeing due diligence | Setting up and overseeing due diligence |
| 1. Member States shall ensure that directors of companies referred to in Article 2(1) are responsible for putting in place and overseeing the due diligence actions referred to in Article 4 and in particular the due diligence policy referred to in Article 5, with due consideration for relevant input from stakeholders and civil society organisations. The directors shall report to the board of directors in that respect. | 1. Member States shall ensure that directors of companies referred to in Article 2(1) are responsible for putting in place and overseeing the due diligence actions referred to in Article 4 and in particular the due diligence policy referred to in Article 5 and the implementation of the plan referred to in Article 15 with mandatory meaningful engagement and due consideration for relevant input from all stakeholders and civil society organisations including human rights defenders. The directors shall regularly report to the board of directors in that respect who shall discuss progress and challenges in addressing salient human rights, labour rights, environmental and rule of law and good governance impacts and review the company’s business model and any proposed changes to it. |
| 2. Member States shall ensure that directors take steps to adapt the corporate strategy to take into account the actual and potential adverse impacts identified pursuant to Article 6 and any measures taken pursuant to Articles 7 to 9. | 2. Member States shall ensure that directors take steps to adapt the business model and strategy to address corporate sustainability due diligence risks and take into account the actual and potential adverse impacts identified pursuant to Article 6 and any measures taken pursuant to Articles 7 to 9. |
| 2a. The Commission shall establish an expert advisory group on due diligence to support and advise entities on the implementation of this Directive and best practices. |
Amendment 112
Proposal for a directive
Annex I – Part I – subheading 1
| Text proposed by the Commission | Amendment |
|---|---|
| Violations of rights and prohibitions included in international human rights agreements | Violations of human and labour rights and prohibitions included in international human and labour rights agreements |
Amendment 113
Proposal for a directive
Annex I – Part I – point 7
| Text proposed by the Commission | Amendment |
|---|---|
| 7. Violation of the right to enjoy just and favourable conditions of work including a fair wage, a decent living, safe and healthy working conditions and reasonable limitation of working hours in accordance with Article 7 of the International Covenant on Economic, Social and Cultural Rights; | 7. Violation of the right to enjoy just and favourable conditions of work including a fair wage, a decent living, safe and healthy working conditions and reasonable limitation of working hours in accordance with Article 7 of the International Covenant on Economic, Social and Cultural Rights and Article 23(3) and Article 25(1) of the Universal Declaration of Human Rights; |
Justification
Articles 23 and 25 of the Universal Declaration of Human Rights offer further detailed clarification of the elements of a decent standard of living and just and favorable conditions of work.
Amendment 114
Proposal for a directive
Annex I – Part I – point 18 – paragraph 1
| Text proposed by the Commission | Amendment |
|---|---|
| in accordance with Article 3 of the Universal Declaration of Human Rights, Article 5 of the International Covenant on Civil and Political Rights and Article 12 of the International Covenant on Economic, Social and Cultural Rights; | in accordance with Article 3 of the Universal Declaration of Human Rights, Article 5 of the International Covenant on Civil and Political Rights and Article 12 of the International Covenant on Economic, Social and Cultural Rights, and the right to a clean, healthy and sustainable environment; |
Amendment 115
Proposal for a directive
Annex I – Part I – point 20
| Text proposed by the Commission | Amendment |
|---|---|
| 20. Violation of the indigenous peoples’ right to the lands, territories and resources which they have traditionally owned, occupied or otherwise used or acquired in accordance with Article 25, 26 (1) and (2), 27, and 29 (2) of the United Nations Declaration on the Rights of Indigenous Peoples; | 20. Violation of the indigenous peoples’ right to the lands, territories and resources which they have traditionally owned, occupied or otherwise used or acquired in accordance with the United Nations Declaration on the Rights of Indigenous Peoples; |
Amendment 116
Proposal for a directive
Annex I – Part I – point 20 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| 20a. Violation of the indigenous peoples’ right to give, modify, withhold or withdraw their free, prior, and informed consent to interventions, decisions and activities that can affect their lands, territories, resources and rights, in accordance with Article 10, Article 11(2), Articles 19 and 28, Article 29(2) and Article 32(2), of the United Nations Declaration on the Rights of Indigenous Peoples and Article 6 and Article 16(2) of ILO Convention 169 on Indigenous and Tribal Peoples; |
Justification
An explicit reference to the free, prior and informed consent of Indigenous peoples should be added in the Annex, in line with the United Nations Declaration on the Rights of Indigenous Peoples and ILO Convention 169 on Indigenous and Tribal Peoples.
Amendment 117
Proposal for a directive
Annex I – Part I – point 21 a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| 21 a. In conflict affected areas, violations of international humanitarian law as laid out notably in the Geneva Conventions and the additional protocols. |
Amendment 118
Proposal for a directive
Annex I – Part I – subheading 2
| Text proposed by the Commission | Amendment |
|---|---|
| 2. Human rights and fundamental freedoms conventions | 2. Human rights, labour rights and fundamental freedoms conventions |
| The Universal Declaration of Human Rights; | The Universal Declaration of Human Rights; |
| The International Covenant on Civil and Political Rights; | The International Covenant on Civil and Political Rights; |
| The International Covenant on Economic, Social and Cultural Rights; | The International Covenant on Economic, Social and Cultural Rights; |
| The Convention on the Prevention and Punishment of the Crime of Genocide; | The Convention on the Prevention and Punishment of the Crime of Genocide; |
| The Convention against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment; | The Convention against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment; |
| The International Convention on the Elimination of All Forms of Racial Discrimination; | The International Convention on the Elimination of All Forms of Racial Discrimination; |
| The Convention on the Elimination of All Forms of Discrimination Against Women; | The Convention on the Elimination of All Forms of Discrimination Against Women; |
| The Convention on the Rights of the Child; | The Convention on the Rights of the Child; |
| The Convention on the Rights of Persons with Disabilities; | The Convention on the Rights of Persons with Disabilities; |
| The United Nations Declaration on the Rights of Indigenous Peoples; | The United Nations Declaration on the Rights of Indigenous Peoples; |
| The International Convention for the Protection of All Persons from Enforced Disappearance; | |
| The Declaration on the Rights of Persons Belonging to National or Ethnic, Religious and Linguistic Minorities; | The Declaration on the Rights of Persons Belonging to National or Ethnic, Religious and Linguistic Minorities; |
| The United Nations Declaration of the Elimination of Violence against Women; | |
| The United Nations Declaration on the Rights of Peasants and Other People Working in Rural Areas; | |
| The United Nations Declaration on Human Rights Defenders; | |
| The United Nations General Assembly Resolution on the right to a clean, healthy and sustainable environment; | |
| United Nations Convention against Transnational Organised Crime and the Palermo Protocol to Prevent, Suppress and Punish Trafficking in Persons Especially Women and Children, supplementing the United Nations Convention against Transnational Organized Crime; | United Nations Convention against Transnational Organised Crime and the Palermo Protocol to Prevent, Suppress and Punish Trafficking in Persons Especially Women and Children, supplementing the United Nations Convention against Transnational Organized Crime; |
| The International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families; | |
| The International Labour Organization’s Declaration on Fundamental Principles and Rights at Work; | The International Labour Organization’s Declaration on Fundamental Principles and Rights at Work; |
| The International Labour Organization’s Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy; | The International Labour Organization’s Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy; |
| The International Labour Organization’s core/fundamental conventions: | The International Labour Organization’s core/fundamental conventions: |
| Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) | Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) |
| Right to Organise and Collective Bargaining Convention, 1949 (No. 98) | Right to Organise and Collective Bargaining Convention, 1949 (No. 98) |
| Forced Labour Convention, 1930 (No. 29) and its 2014 Protocol; | Forced Labour Convention, 1930 (No. 29) and its 2014 Protocol; |
| Abolition of Forced Labour Convention, 1957 (No. 105) | Abolition of Forced Labour Convention, 1957 (No. 105) |
| Minimum Age Convention, 1973 (No. 138) | Minimum Age Convention, 1973 (No. 138) |
| Worst Forms of Child Labour Convention, 1999 (No. 182) | Worst Forms of Child Labour Convention, 1999 (No. 182) |
| Equal Remuneration Convention, 1951 (No. 100) | Equal Remuneration Convention, 1951 (No. 100) |
| Discrimination (Employment and Occupation) Convention, 1958 (No. 111) | Discrimination (Employment and Occupation) Convention, 1958 (No. 111) |
| The International Labour Organization’s Domestic Workers Convention, 2011 (No. 189) | |
| The International Labour Organization’s Violence and Harassment Convention, 2019 (No. 190). | |
| The International humanitarian law instruments – The Four Geneva Conventions of 1949: | |
| Convention (I) for the Amelioration of the Condition of the Wounded and Sick in Armed Forces in the Field | |
| Convention (II) for the Amelioration of the Condition of Wounded, Sick and Shipwrecked Members of Armed Forces at Sea | |
| Convention (III) relative to the Treatment of Prisoners of War | |
| Convention (IV) relative to the Protection of Civilian Persons in Time of War | |
| Additional protocols to the Geneva Conventions. | |
| The Rome statute of the International Criminal Court | |
| The European Convention on Human rights | |
| The Charter of Fundamental Rights of the European Union | |
| The European Social Charter. |
Amendment 119
Proposal for a directive
Annex I – Part II – title
| Text proposed by the Commission | Amendment |
|---|---|
| violations of internationally recognized objectives and prohibitions included in environmental conventions | violations of objectives and prohibitions recognised at Union and international level included in environmental conventions AND UNION LEGISLATION |
Amendment 120
Proposal for a directive
Annex I – Part II a (new)
| Text proposed by the Commission | Amendment |
|---|---|
| VIOLATIONS OF OBLIGATIONS, PROHIBITIONS AND STANDARDS INCLUDED IN INTERNATIONAL AND REGIONAL RULE OF LAW AND GOOD GOVERNANCE CONVENTIONS AND GUIDELINES | |
| 1. VIOLATIONS OF INTERNATIONALLY AND REGIONALLY RECOGNISED OBLIGATIONS, PROHIBITIONS AND STANDARDS | |
| 1. Violation of the obligation to comply with the Union rules on financial information disclosed by companies as laid down: | |
| (a) in Regulation (EC) No 1606/2002 for listed companies | |
| (b) in Directive 2013/34/EU for non-listed companies and small businesses. | |
| 2. Violation of the obligation to comply with the Directive2014/95/EU of the European Parliament and of the Council1a, regardless of whether the company is private or state owned or state controlled. | |
| 3. Violation of the obligations to combat corruption which should include, inter alia: | |
| (a) the intentional promise, offering or giving to a public official or any other person, directly or indirectly, of an undue advantage in order that the public official or the person abuse his or her real or supposed influence with a view to obtaining from an administration or public authority of the State Party an undue advantage for the original instigator of the act or for any other person; | |
| (b) the intentional solicitation or acceptance by a public official or any other person, directly or indirectly, of an undue advantage for himself or herself or for another person in order that the public official or the person abuse his or her real or supposed influence with a view to obtaining from an administration or public authority of the State Party to the Convention an undue advantage; | |
| (c) the intentional promise, offering or giving, directly or indirectly, of an undue advantage to any person who directs or works, in any capacity, for a private sector entity or a state owned or state controlled enterprise, for the person himself or herself or for another person, in order that he or she, in breach of his or her duties, act or refrain from acting; | |
| (d) the intentional solicitation or acceptance, directly or indirectly, of an undue advantage by any person who directs or works, in any capacity, for a private sector entity or a state owned or state controlled enterprise, for the person himself or herself or for another person, in order that he or she, in breach of his or her duties, act or refrain from acting; | |
| (e) the intentional embezzlement committed in the course of economic, financial or commercial activities by a person who directs or works, in any capacity, in the private or state owned or state controlled company, of any property, private funds or securities or any other thing of value entrusted to him or her by virtue of his or her position; | |
| (f) having no code of conduct in place for the correct, honourable and proper performance of the activities of business, both private and state owned or state controlled, and all relevant professions and the prevention of conflicts of interest, and for the promotion of the use of good commercial practices among businesses and in the contractual relations of businesses with states in the whole supply chain; | |
| (g) lack of transparency among business partners, including appropriate measures regarding the identity of legal and natural persons involved in the establishment and management of corporate entities including their beneficial owners; | |
| (h) lack of appropriate prevention of the misuse of procedures regulating private or state owned or state controlled entities, including procedures regarding subsidies and licences granted by public authorities for commercial activities; | |
| (i) lack of prevention of conflicts of interest by imposing restrictions, as appropriate and for a reasonable period of time, on the professional activities of former public officials or on the employment of public officials after their resignation or retirement, where such activities or employment relate directly to the functions held or supervised by those public officials during their tenure; | |
| (j) lack of measures ensuring that, taking into account the structure and size of the company, sufficient internal auditing controls to assist in preventing and detecting acts of corruption are in place and that the accounts and required financial statements of the company are subject to appropriate auditing and certification procedures. | |
| 4. Violation of the following prohibitions: | |
| (a) the establishment of off-the-books accounts; | |
| (b) the making of off-the-books or inadequately identified transactions; | |
| (c) the recording of non-existent expenditure; | |
| (d) the entry of liabilities with incorrect identification of their objects; | |
| (e) the use of false documents; and | |
| (f) the intentional destruction of bookkeeping documents earlier than foreseen by the law. | |
| 5. Failure to take appropriate measures to promote the active participation of individuals and groups, in particular, the civil society, non-governmental organizations and community-based organizations, depending on causes and gravity of and the threat posed by corruption and its adverse impacts to human rights, environment, climate as well as adverse economic and social impacts to people and communities concerned and on the rule of law and governance systems. | |
| 6. Intentional laundering of proceeds of crime in accordance with the applicable legislation: | |
| (a) by conversion or transfer or property, knowing that such property is the proceeds of crime, for the purpose of concealing or disguising the illicit origin of the property or of helping any person who is involved in the commission of the predicate offence to evade the legal consequences of his or her action; | |
| (b) by concealment or disguise of the true nature, source, location, disposition, movement or ownership of or rights with respect to property, knowing that such property is the proceeds of crime; | |
| (c) the acquisition, possession or use of property, knowing, at the time of receipt, that such property is the proceeds of crime; | |
| (d) participation, in association with or conspiracy to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the offences stablished in accordance with the applicable legislation. | |
| 7. Obstruction of justice: | |
| (a) by using physical force, threats or intimidation or the promise, offering or giving of an undue advantage to induce false testimony or to interfere in the giving of testimony or the production of evidence in a proceeding in relation to the commission of offences established in accordance with the applicable law; | |
| (b) by using physical force, threats or intimidation to interfere with the exercise of official duties by a justice or law enforcement official in relation to the commission of offences established in accordance with the applicable law. | |
| 2. NON-EXHAUSTIVE LIST OF CONVENTIONS AND GUIDELINES: | |
| United Nation Convention against corruption, 2003 | |
| United Nations Convention against Transnational Organized Crime, 2000 | |
| Protocol against the Smuggling of Migrants by Land, Sea and Air, supplementing the United Nations Convention against Transnational Organized Crime, 2000 | |
| Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children, supplementing the United Nations Convention against Transnational Organized Crime, 2000 | |
| International Convention Against the Recruitment, Use, Financing and Training of Mercenaries, 1989 | |
| International Convention for the Suppression of the Financing of Terrorism, 1999 | |
| Council of Europe Civil law on Corruption 1999 - OECD Anti Bribery Convention, 1997 | |
| United Nations Declaration of Basic Principles of Justice for Victims of Crime and Abuse of Power, 1985 | |
| Basic Principles on the Independence of the Judiciary (endorsed by General Assembly resolutions 40/32 of 29 November 1985 and 40/146 of 13 December 1985) | |
| Bangalore Principles of Judicial Conduct (endorsed by the Economic and Social Council in ECOSOC resolution 2006/23) | |
| The Basic Principles of the Role of lawyers adopted by the 8th UN Congress on the prevention of Crime and the Treatment of Offenders, Havana (Cuba), 27 August to 7 September 1990 | |
| Recommendation Rec (2000) 21 of 25 October 2000 of the committee of Ministers of the Council of Europe to member States on the freedom of exercise of the profession of lawyer | |
| General Principles of the legal profession adopted by the International bar Association 2014- IBA Practical Guide on Business and Human Rights for Business Lawyers (adopted by a resolution of the IBA council 28 May 2016) | |
| CCBE Practical Issues for Bar and Law Societies on Corporate Social Responsibility -Guidance III (May 2017) | |
| Report of the Task Force on the role of lawyers and International Commercial Structures 2019 | |
| UN Global Compact (principle10) | |
| OECD Guidelines for Multinational Enterprises | |
| ISO 26000. | |
| | |
| 1a Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups (OJ L 330, 15.11.2014, p. 1). |
Amendment 121
Proposal for a directive
Annex I – Part II b (new)
| Text proposed by the Commission | Amendment |
|---|---|
| NON-EXHAUSTIVE LIST OF ECONOMIC ACTIVITIES TO BE CONSIDERED AS HIGH-RISK ACTIVITIES | |
| The economic sector activities listed below shall be considered as high risks activities due to their potentiality to bring about adverse impacts on human rights, the environment, and the rule of law and good governance, in particular in the developing countries where those activities are carried out. | |
| This list is based on the standard European nomenclature of productive economic activities (NACE codes). | |
| It should be considered a non-exhaustive list that may be updated by the Commission in accordance with Article 29 (c) of this Directive: | |
| (i) the manufacture of textiles, wearing apparel, articles of fur, leather and related products (including footwear), and the wholesale trade and retail of textiles, wearing apparel, articles of fur, leather and related products (including clothing and footwear); | |
| (ii) agriculture, forestry and fishing including aquaculture), the management of land and resources (including in relation to nature conservation or other related activities), the manufacture of food products, and the wholesale trade of agricultural raw materials, live animals and animal products, wood, food, and beverages; | |
| (iii) the energy sector, including gas, nuclear, steam, electricity and other sources throughout their life cycle, from extraction, refining, production, combustion of fuels, transportation, storage and waste management including radioactive waste; | |
| (iv) all mining and quarrying activities, mining support service activities, and the wholesale trade of mineral resources, basic and intermediate mineral products (including metals and metal ores, construction materials, fuels, chemicals and other intermediate products); | |
| (v) the production, use and disposal of organic and inorganic chemicals, including pharmaceuticals, plant protection products and fertilisers; | |
| (vi) the manufacture and wholesale trade of rubber and plastic products; | |
| (vii) the manufacture and wholesale trade of weapons and ammunition, including dual-use items, manufacture of military fighting vehicles; | |
| (viii) the manufacture and wholesale trade of computer, electronic and optical products; | |
| (ix) electric power generation, transmission and distribution; | |
| (x) water collection, treatment and supply; | |
| (xi) waste collection, treatment and disposal activities; | |
| (xii) land, water and air transport (except passenger rail transport, interurban, other passenger land transport) and transport via pipelines as well as logistics and storage; | |
| (xiii) the construction of residential and non-residential buildings, civil engineering; | |
| (xiv) the building, repair and maintenance of ships and boats; | |
| (xv) private security activities and security systems service activities, including the development and operation of biometrics and surveillance technologies; and | |
| (xvi) financial and insurance activities. |
Procedure pages
How the committees handled the text, and how their members voted on it.
Procedure – committee asked for opinion 1 paragraph
| Title | Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937 | |
| References | COM(2022)0071 – C9-0050/2022 – 2022/0051(COD) | |
| Committee responsible Date announced in plenary | JURI 4.4.2022 | |
| Opinion by Date announced in plenary | DEVE 15.9.2022 | |
| Rapporteur for the opinion Date appointed | Pierfrancesco Majorino 22.3.2022 | |
| Discussed in committee | 26.10.2022 | |
| Date adopted | 25.1.2023 | |
| Result of final vote | +: –: 0: | 14 10 0 |
| Members present for the final vote | Barry Andrews, Eric Andrieu, Hildegard Bentele, Stéphane Bijoux, Dominique Bilde, Udo Bullmann, Catherine Chabaud, Beata Kempa, Karsten Lucke, Janina Ochojska, Michèle Rivasi, Christian Sagartz, Tomas Tobé, Miguel Urbán Crespo, Bernhard Zimniok | |
| Substitutes present for the final vote | Ilan De Basso, Malte Gallée, Marlene Mortler, María Soraya Rodríguez Ramos, Carlos Zorrinho | |
| Substitutes under Rule 209(7) present for the final vote | Claude Gruffat, Miriam Lexmann, Aušra Maldeikienė, Carles Puigdemont i Casamajó |
Final vote by roll call in committee asked for opinion 3 paragraphs
14 · For
- NI Renew S&D The Left Verts/ALE
- Carles Puigdemont i Casamajó Barry Andrews, Stéphane Bijoux, Catherine Chabaud, María Soraya Rodríguez Ramos Eric Andrieu, Udo Bullmann, Ilan De Basso, Karsten Lucke, Carlos Zorrinho Miguel Urbán Crespo Malte Gallée, Claude Gruffat, Michèle Rivasi
10 · Against
- ECR ID PPE
- Beata Kempa Dominique Bilde, Bernhard Zimniok Hildegard Bentele, Miriam Lexmann, Aušra Maldeikienė, Marlene Mortler, Janina Ochojska, Christian Sagartz, Tomas Tobé
0 · Abstained