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DRAFT OPINION (COM2022)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

ENVI-PA-734465

Committee on the Environment, Public Health and Food Safety · Rapporteur: Tiemo Wölken

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This is the draft opinion of the Committee on the Environment, Public Health and Food Safety on the proposed Corporate Sustainability Due Diligence Directive. It proposes amendments that widen the scope to smaller companies, cover all business relationships, add animal welfare and 'One Health', and require climate transition plans. The amendments lower the employee and turnover thresholds, extend due diligence to all direct and indirect business relationships, and add new definitions for adverse animal welfare impact, polluter pays principle and 'One Health' approach. They require companies to engage meaningfully with stakeholders, publish due diligence policies annually, and pursue prioritisation strategies when not all impacts can be addressed at once. They require climate transition plans with absolute greenhouse gas reduction targets for scope 1, 2 and 3 emissions for 2030 and five-year steps to 2050, and align directors' variable remuneration with climate targets. They strengthen the liability regime, empower courts to order disclosure of evidence, and allow trade unions and civil society organisations to bring representative actions.

Committee position. The rapporteur proposes amendments to the Commission proposal to widen its scope to smaller companies and all business relationships, add animal welfare and 'One Health', require climate transition plans with emission reduction targets, and strengthen liability and access to justice.

Key points

  1. Due diligence obligations should cover all direct and indirect business relationships, not only 'established' ones, and the concept of 'established business relationship' is deleted.
  2. The employee threshold for due diligence is lowered from more than 500 to more than 50 employees, and the worldwide net turnover threshold from EUR 150 million to EUR 8 million.
  3. Companies with a net worldwide turnover of more than EUR 8 million are covered if at least 50% of turnover comes from high-impact sectors, and companies covered by the EU Emissions Trading System are also included.
  4. Third-country companies are covered if they generated a net turnover of more than EUR 8 million in the Union in the financial year preceding the last financial year.
  5. New definitions are added for 'adverse animal welfare impact', 'polluter pays principle' and 'One Health approach', and 'adverse environmental impact' is extended to violations of international environmental law and harm to air, water, soil, biodiversity and human health.
  6. Companies must engage meaningfully with stakeholders, develop due diligence policies in consultation with them, and update and publish those policies annually.
  7. Companies must pursue prioritisation strategies when unable to address all identified adverse impacts at the same time, considering severity, likelihood, ability to address and direct contribution.
  8. Companies must adopt climate transition plans aligned with limiting global warming to 1.5 °C and the EU climate neutrality target, including absolute greenhouse gas reduction targets for scope 1, 2 and 3 emissions for 2030 and five-year steps to 2050.
  9. Directors' variable remuneration must be aligned with the achievement of climate targets, in particular greenhouse gas emissions reduction.
  10. Companies can avoid liability for damages from indirect partners if they demonstrate compliance with their obligations, unless it was unreasonable to expect the action taken to be appropriate.
  11. Courts must be empowered to order companies to disclose evidence, companies must prove compliance where a claim provides evidence of liability, and trade unions and civil society organisations can bring representative actions.
  12. The Commission may issue guidelines in consultation with Member States, stakeholders, the European Union Agency for Fundamental Rights, the European Environment Agency and the European Food Safety Authority.

Who is affected

  • Companies with more than 50 employees and EUR 8 million worldwide net turnover, and smaller companies in high-impact sectors.
  • Third-country companies with more than EUR 8 million net turnover in the Union.
  • Small and medium-sized enterprises (SMEs) in value chains, which Member States should support with websites, portals or platforms and possible financial support.
  • Directors, who become responsible for due diligence and climate transition plans and whose variable remuneration must align with climate targets.
  • Stakeholders, including employees, workers' representatives, NGOs and affected communities, who must be consulted and can bring representative actions.

Figures and deadlines

  • More than 50 employees on average for due diligence obligations.
  • Worldwide net turnover exceeding EUR 8 million in the financial year preceding the last financial year.
  • Net turnover of more than EUR 8 million in the Union for third-country companies.
  • At least 50% of net turnover generated in one or more high-impact sectors.
  • Due diligence applies 2 years after the end of the transposition period for companies in high-impact sectors.
  • Limiting global warming to 1.5 °C in line with the Paris Agreement.
  • Climate neutrality by 2050 and intermediate climate targets by 2030.
  • Absolute greenhouse gas emission reduction targets for scope 1, 2 and 3 emissions for 2030 and in five-year steps up to 2050.