Companies must identify and, where appropriate, prevent, halt, or reduce the negative impacts of their activities on human rights and the environment, including child labor, slavery, labor exploitation, pollution, environmental degradation, and biodiversity loss. You will be asked for it. They also need to monitor and assess the impact of their value chain partners, including not only suppliers but also areas such as sales, distribution, transportation, storage and waste management.
The new rules apply to EU-based companies with more than 500 employees and a global turnover of more than 40 million euros, regardless of industry, including financial services, with 250 or more employees and a global turnover of more than 40 million euros. 150 million euros. Non-EU companies with a turnover of more than €150 million (at least €40 million generated within the EU) are also included.
Directors’ duty of care as a prudent manager and the company‘Relationship with stakeholders
Companies must implement a transition plan to limit global warming to 1.5 degrees Celsius, and for large companies with 1,000 or more employees, achieving the plan’s goals may affect directors’ variable remuneration (FE bonus). become. The new rules also require companies to engage with those affected by their actions, including human rights and environmental activists, put in place grievance mechanisms and regularly monitor the effectiveness of their due diligence policies. There is. To facilitate investor access, information about a company’s due diligence policy should also be available at the European Single Access Point (ESAP).
Sanctions and supervision mechanisms
Violating companies may be liable for damages and face sanctions from national regulators. Sanctions include measures such as “naming and shaming,” removal of a company’s products from the market, or a fine of at least 5% of global net sales. Non-EU companies that do not comply with the rules will be banned from public procurement within the EU.
According to the adopted text, the new obligations will apply after three or four years, depending on the size of the company. Small and medium-sized businesses will be able to delay the application of the new rules for an additional year.
The parliamentary negotiating position was adopted with 366 votes in favor, 225 against, and 38 abstentions.
Quote
“The European Parliament’s support is a turning point in thinking about the role of business in society. Corporate responsibility law will empower companies that treat people and the environment in a healthy way, rather than those that have built their profit models on environmental destruction and exploitation. We must ensure that our future is secure. Most companies take their obligations to people and the environment seriously. We will support these companies with this Fair Trading Act. . And at the same time, we shut down a small number of large cowboy companies that ignored the rules,” Rapporteur Lara Walters (New Jersey S&D) said after the plenary vote.
background
The European Parliament has consistently called for legislation to strengthen corporate accountability and mandate due diligence. The European Commission’s proposal was submitted on 23 February 2022. This proposal complements other existing and upcoming legislation, including deforestation regulations, conflict mineral regulations, and draft regulations banning products made with forced labor.
next step
Now that Parliament has adopted its position, negotiations can begin with member states on the final text of the bill. Member States adopted a position on the draft Directive in November 2022.
In adopting this report, Congress responds to the public’s expectations regarding sustainable consumption, as expressed in Proposition 5(13), and addresses the ethical and trade expectations expressed in Propositions 19(2) and 19(3). Strengthening aspects and sustainable growth model. It is set out in Proposals 11(1) and 11(8) of the Conclusions of the Conference on the Future of Europe.