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DRAFT 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

ECON-PA-736711

Committee on Economic and Monetary Affairs · Rapporteur: René Repasi

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The Committee on Economic and Monetary Affairs proposes amendments to the Commission's proposal for a directive on corporate sustainability due diligence. It lowers the employee and turnover thresholds for companies covered, adds balance-sheet and assets-under-management thresholds, and brings financial services into the high-impact sectors. It removes the concept of 'established' business relationships, so due diligence covers direct and indirect business relationships regardless of duration, and requires companies to prioritise adverse impacts by severity and likelihood. It requires stakeholder consultation at all stages of due diligence, strengthens complaint procedures, and requires companies to adopt a climate transition plan covering the entire value chain with emissions reduction objectives. It sets a minimum of 50% sustainable investment targets for executive directors' variable remuneration, and requires Member States to provide for administrative fines comparable to those in competition and data protection law. It introduces a presumption of failure to comply and causal link in liability claims, allows companies to rebut it, and makes companies liable for damages from their own operations and those of their subsidiaries. It requires the Commission to adopt guidance on model contractual clauses and on competition law for collective leverage, and to report on the directive's implementation after 7 years.

Committee position. The Committee on Economic and Monetary Affairs calls on the Committee on Legal Affairs, as the committee responsible, to take into account its amendments. It proposes lowering thresholds, removing the 'established' business relationship concept, adding financial services to high-impact sectors, strengthening stakeholder consultation, climate planning, director remuneration rules and liability provisions.

Key points

  1. Companies with more than 250 employees or a net worldwide turnover above EUR 50 million must comply with due diligence; companies with a balance sheet above EUR 43 million or assets under management above EUR 1.2 billion are also covered.
  2. Companies with more than 50 employees or a net worldwide turnover above EUR 10 million or a total balance sheet above EUR 10 million are covered if at least 50% of turnover comes from high-impact sectors, including financial services.
  3. Third-country companies with a net turnover above EUR 50 million in the Union, or above EUR 10 million but not more than EUR 50 million in high-impact sectors, are covered.
  4. The concept of 'established' business relationships is deleted, so due diligence covers direct and indirect business relationships regardless of duration.
  5. Companies must prioritise adverse impacts by severity and likelihood, and may address them in that order.
  6. Stakeholder consultation and involvement is required at all stages of the due diligence process.
  7. Companies must adopt a plan ensuring their business model is compatible with limiting global warming to 1.5°C, climate neutrality by 2050 and a 55% reduction in net greenhouse gas emissions by 2030 compared to 1990 levels, covering the entire value chain.
  8. Directors' variable remuneration must be linked to the company's medium- and long-term interests and sustainability, and executive directors must set sustainable investment targets of minimum 50% in performance criteria.
  9. Companies must provide safe, accessible and equitable complaint procedures allowing anonymous and confidential complaints, without precluding access to judicial mechanisms.
  10. Companies linked to adverse impacts without causing or contributing to them must use their leverage to the greatest extent possible to mitigate, bring to an end or minimise impacts and assist in remediation.
  11. Member States must provide for administrative fines comparable in size to those in competition law and data protection law, and sanctions may include exclusion from procurement, State aid and export credit support.
  12. In liability claims, national courts must presume failure to comply and the causal link where the victim has demonstrated damage; the company has the right to rebut the presumption, and companies are liable for damages from their own operations and those of their subsidiaries.

Who is affected

  • EU companies meeting the employee, turnover, balance-sheet or assets-under-management thresholds must carry out due diligence.
  • Third-country companies with significant operations in the EU must comply with due diligence obligations.
  • Financial undertakings, including market operators, credit rating agencies and benchmark administrators, are covered and must not rely solely on credit rating agencies, sustainability rating agencies or benchmark administrators for information.
  • SMEs in value chains must receive targeted and proportionate support, and Member States must set up dedicated websites, portals or platforms for them.
  • Directors must integrate due diligence obligations when setting variable remuneration and set sustainable investment targets of minimum 50%.

Figures and deadlines

  • More than 250 employees on average for EU companies to be covered.
  • Net worldwide turnover exceeding EUR 50 million for EU companies to be covered.
  • Balance sheet of more than EUR 43 million as an alternative threshold.
  • Assets under management of more than EUR 1.2 billion as an alternative threshold.
  • More than 50 employees or net worldwide turnover above EUR 10 million or total balance sheet above EUR 10 million for high-impact sector companies.
  • At least 50% of net turnover generated in high-impact sectors.
  • Net turnover of more than EUR 50 million in the Union for third-country companies.
  • Net turnover of more than EUR 10 million but not more than EUR 50 million in the Union for third-country companies in high-impact sectors.