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Article

24 Apr 2024

Author:
European Parliament

Due diligence: MEPs adopt rules for firms on human rights and environment

On Wednesday, Parliament gave a final green light to new rules obliging firms to mitigate their negative impact on human rights and the environment.

The European Parliament approved with 374 votes against 235 and 19 abstentions the new “due diligence” directive, agreed on with the Council, requiring firms and their upstream and downstream partners, including supply, production and distribution to prevent, end or mitigate their adverse impact on human rights and the environment...

The rules will apply to EU companies and parent companies with over 1000 employees and a worldwide turnover higher than 450 million euro... Non-EU companies, parent companies and companies with franchising or licensing agreements in the EU reaching the same turnover thresholds in the EU will also be covered. These firms will have to integrate due diligence into their policies, make related investments, seek contractual assurances from their partners, improve their business plan or provide support to small and medium-sized business partners to ensure they comply with new obligations. Companies will also have to adopt a transition plan to make their business model compatible with the Paris Agreement global warming limit of 1.5°C...

Companies will be liable for damages caused by breaching their due diligence obligations and will have to fully compensate their victims...

The directive now also needs to be formally endorsed by the Council, signed and published in the EU Official Journal. It will enter into force twenty days later. Member states will have two years to transpose the new rules into their national laws...

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