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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

IMCO-PA-736656

Committee on the Internal Market and Consumer Protection · Rapporteur: Deirdre Clune

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The Committee on the Internal Market and Consumer Protection's draft opinion proposes amendments to the Commission's proposal for a directive on corporate sustainability due diligence. It seeks greater harmonisation, a risk-based approach, and more support for small and medium-sized enterprises (SMEs). The amendments would bar member states from laying down diverging national provisions, require companies to identify impacts using a risk-based monitoring methodology, and allow parent companies to fulfil due diligence obligations on behalf of subsidiaries. They would make Commission guidelines mandatory, require each member state to designate a national single point of contact, and restrict disengagement to severe or repeated breaches after failed risk mitigation attempts. The amendments would also require companies to establish a prioritisation strategy, allow reliance on consolidated group reporting, and require the Commission to review the directive's impact on SMEs after three years.

Committee position. The rapporteur supports the proposal's objectives but proposes amendments to increase harmonisation, preserve a risk-based approach, streamline procedures, and strengthen support for SMEs, including through group-level due diligence and national single points of contact.

Key points

  1. The draft opinion supports the proposal's aim to foster sustainable corporate behaviour and require companies to identify and prevent, end or mitigate adverse human rights and environmental impacts.
  2. It proposes amendments to increase harmonisation, avoid fragmentation, preserve a risk-based approach, streamline procedures and support SMEs in complying.
  3. It would add a new Article 1(2a) barring member states from laying down national provisions diverging from the directive unless the directive provides otherwise.
  4. It would require companies to identify actual and potential adverse impacts by means of a risk-based monitoring methodology taking into account likelihood, severity, urgency, and the nature and context of operations.
  5. It would add a new Article 7a allowing parent companies to fulfil due diligence obligations on behalf of subsidiaries that cooperate, provide information, and meet specified conditions.
  6. It would require companies to establish a prioritisation strategy when unable to address all impacts simultaneously, treating severity as the predominant factor for human rights risks.
  7. It would restrict disengagement to cases of severe or repeated breaches after repeated failed risk mitigation attempts, and remove contractual cascading requirements.
  8. It would require companies to provide targeted and proportionate support for SMEs with which they have established business relationships, removing the condition that compliance would jeopardise the SME's viability.
  9. It would require the Commission to issue clear and easy-to-understand guidelines, particularly taking into account SMEs' needs and enabling administrative and financial assistance.
  10. It would require each member state to designate a national single point of contact on corporate sustainability due diligence, which may also exercise a liaison function for cross-border cooperation.
  11. It would allow companies to rely on consolidated group reporting to fulfil reporting requirements and require the Commission to ensure reporting is possible via a simplified form.
  12. It would require the Commission to review the directive's impact on SMEs, including indirect costs and economic, social and environmental benefits, three years after entry into force.

Who is affected

  • Companies in scope, which would have to integrate risk-based due diligence, establish prioritisation strategies, and may rely on group-level reporting.
  • Small and medium-sized enterprises (SMEs), which would receive targeted support, guidelines, and a national single point of contact.
  • Parent companies and their subsidiaries, which could fulfil due diligence obligations at group level under conditions.
  • Member states, which would be barred from diverging national provisions and required to designate a single point of contact.
  • Trade unions, workers' representatives and civil society organisations, which could submit substantiated concerns on behalf of affected persons.

Figures and deadlines

  • At least every 12 months, throughout the life of an activity or relationship, for identifying adverse impacts.
  • 7 years after the date of entry into force of this Directive, by which the Commission shall submit an implementation report.
  • 3 years after the date of entry into force of this Directive, by which the Commission shall review the impact on SMEs.