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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

INTA-PA-737332

Committee on International Trade · Rapporteur: Barry Andrews

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The Committee on International Trade's draft opinion proposes amendments to the Commission's proposal for a Corporate Sustainability Due Diligence Directive. It lowers employee and turnover thresholds, narrows the supply chain definition, strengthens complaint and disengagement rules, and makes Commission guidelines and support mandatory. It adds financial services to the covered sectors, requires companies to engage stakeholders before disengagement, and exempts smaller companies from liability for damages. It also shortens the Commission's implementation report deadline to 5 years and requires the Commission to propose legislative revisions if needed.

Committee position. The Committee on International Trade proposes amendments to the Commission proposal, including lower thresholds, a narrower supply chain definition, stronger disengagement and complaint rules, mandatory Commission guidelines, and a liability exemption for smaller companies.

Key points

  1. Companies must integrate due diligence into policies, identify and assess adverse human rights and environmental impacts, prevent and mitigate them, establish complaints procedures, monitor effectiveness, communicate publicly and provide remediation.
  2. The employee threshold is lowered to more than 250 employees and net turnover in the Union to more than EUR 40 million.
  3. Companies with 50 or more employees and net turnover in the Union above EUR 700 000 are covered if at least 50% of turnover comes from listed sectors, including financial services.
  4. Non-EU companies are covered at the same EUR 40 million and EUR 700 000 turnover thresholds in the Union.
  5. The 'supply chain' definition covers activities related to production or services and upstream established business relationships, removing downstream activities and the special financial-sector rule.
  6. The Commission may be involved in industry initiatives, and stakeholders are defined to include those affected by potential or actual adverse impacts.
  7. Companies must temporarily suspend commercial relationships where adverse impacts cannot be ended or minimised, and may terminate only as a last resort if the impact is severe, systemic or state-sponsored, after engaging affected stakeholders.
  8. Companies must allow complaints without requiring legitimate concerns, from affected persons, trade unions, workers' representatives and civil society organisations, and inform them of procedures.
  9. The Commission shall issue guidelines, including on follow-up to complaints and interaction with other Union law, and shall complement Member States' support measures and may use trade instruments to help third countries.
  10. The Commission and Member States shall facilitate information on industry schemes and the Commission shall issue guidance for assessing them.
  11. Companies with fewer than 250 employees and net turnover below EUR 40 million in the Union are exempt from liability for damages, without prejudice to other remedies.
  12. The Commission shall report on implementation after 5 years, assess consistency with existing Union legislation, and if necessary propose revisions, including to the Corporate Sustainability Reporting Directive.

Who is affected

  • Companies with more than 250 employees and EUR 40 million Union turnover, and smaller companies in listed sectors.
  • Non-EU companies meeting the turnover thresholds in the Union.
  • Financial undertakings, now explicitly covered as a listed sector.
  • Trade unions, workers' representatives and civil society organisations, who can submit complaints.
  • Smaller companies with fewer than 250 employees and below EUR 40 million Union turnover, exempt from damages liability.

Figures and deadlines

  • more than 250 employees
  • EUR 40 million net turnover in the Union
  • 50 employees or more
  • EUR 700 000 net turnover in the Union
  • at least 50% of net turnover from listed sectors
  • less than 250 employees and less than EUR 40 million net turnover in the Union
  • 5 years after entry into force for the Commission's report