Due diligence: EU’s next steps on corporate accountability
Following the European Commission’s proposal on due diligence rules presented in February, the debate on companies’ obligations to respect human rights and avoid environmental harm is set to pick up speed in September.
The EU’s proposal on corporate accountability requires large companies that are either based in member states or have a considerable turnover in the EU to identify, prevent and mitigate human rights and environmental violations throughout their value chains.
Currently, due diligence rules are in place only in a few EU countries, like France, while in Germany, companies with more than 3,000 employees will need to carry out mandatory due diligence starting January 2023.
The EU proposal would apply to all companies based or operating in the bloc with more than 500 employees and a net €150 million annual turnover but also smaller companies in high-risk sectors, such as textile, agriculture, and mineral extraction industries.
According to Christopher Patz, a policy officer at the European Coalition for Corporate Justice (ECCJ), only a few member states have so far reached a position on the file, also due to the “technical” nature of the directive...
The proposal will also be negotiated by the Parliament, which will likely push to strengthen the requirements for companies and the scope of the regulation.
Meanwhile, activists and NGOs are also calling on the Commission to improve access to justice for victims of human rights abuses and strengthen climate obligations for companies.
Companies, on the other hand, are divided on the new rules... [S]ome support the proposal as it would level the playing field...
Meanwhile, the European Commission is also working on a ban on products made by forced labour, which is expected to be presented in September, complementing the due diligence and transparency obligations already in place...