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OPINION (COM(2022)0071 – C90050/2022 – 2022/0051(COD))

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

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Committee on Development · Rapporteur: Pierfrancesco Majorino

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The Committee on Development gives its opinion on the proposed directive on corporate sustainability due diligence, welcoming it but asking for significant changes to protect developing countries. It proposes amendments to widen the scope to more companies and new sectors, and to add rule of law, good governance and labour rights to the impacts companies must address. It proposes a new article on meaningful stakeholder engagement, stronger grievance mechanisms, value chain mapping and public reporting. It asks for reinforced accompanying measures for developing countries, Commission guidelines, and stronger civil liability with a reversal of the burden of proof.

Committee position. The Committee on Development welcomes the proposal but asks the Committee on Legal Affairs to adopt numerous amendments: widen the scope, add rule of law, good governance and labour rights, strengthen stakeholder engagement, grievance mechanisms, reporting, guidelines, accompanying measures and civil liability.

Key points

  1. The rapporteur welcomes the proposal but says significant improvements are needed for responsible corporate behaviour in developing countries.
  2. Companies should refrain from corruption and support rule of law and good governance, complying with tax laws and honouring contracts throughout their value chains.
  3. The scope should cover as many companies as possible and add sectors such as oil and gas, refining, construction, logistics and infrastructure.
  4. Definitions should cover adverse rule of law and good governance impacts, guidance on environmental impacts, and a new category of vulnerable stakeholders.
  5. A new article should define meaningful stakeholder involvement, and companies should map their value chain and publicly disclose relevant information.
  6. Non-judicial remedies should comply with the United Nations Guiding Principles on Business and Human Rights to provide remedies and compensation.
  7. Member States should ensure companies report on matters covered by the directive, including information to help partners in developing countries address adverse impacts.
  8. The Commission should issue guidelines on rule of law and good governance impacts, conflict-affected areas, stakeholder engagement and value chain mapping.
  9. Accompanying measures should be reinforced to build an enabling environment, protect civic space, raise awareness, build capacity and support access to justice in developing countries.
  10. Civil liability should be reinforced so Member States remove barriers to justice and reverse the burden of proof towards companies.
  11. The directive should apply to EU companies with more than 250 employees and EUR 40 million turnover, and to smaller companies in high-impact sectors.
  12. Third-country companies with a Union net turnover of at least EUR 40 million, or more than EUR 8 million in high-impact sectors, should be covered.

Who is affected

  • Companies operating in developing countries, which would have to respect human rights, labour rights, the environment, rule of law and good governance.
  • EU companies with more than 250 employees and EUR 40 million worldwide net turnover, which would fall under the due diligence obligations.
  • Smaller companies in high-impact sectors, which would face more targeted due diligence two years after the transposition period.
  • Third-country companies with significant Union turnover, which would also be covered by the directive.
  • Stakeholders including workers, trade unions, civil society organisations, indigenous peoples and vulnerable groups, who would gain engagement and grievance rights.

Figures and deadlines

  • EUR 40 million: worldwide net turnover threshold for EU companies with more than 250 employees.
  • EUR 8 million: worldwide net turnover threshold for companies with more than 50 employees in high-impact sectors.
  • 2 years after the end of the transposition period: when due diligence applies to smaller companies in high-impact sectors and to third-country companies.
  • at least every 12 months: frequency for reassessing business relationships and for periodic assessments of due diligence.
  • 1.5 °C: global warming limit with which companies' business models and strategies should be aligned.
  • 2050: target year for achieving climate neutrality.
  • 2025 and 2030: years for which short and medium term absolute emission reduction targets should be defined.

Legal basis: Article 191 and Article 208 of the Treaty on the Functioning of the European Union (TFEU).