Corporate due diligence: no business as usual, literally

In the early hours of the morning MEPs and Council representatives reached a provisional deal to new ethics rules for large companies as part of new European legislation on due diligence of companies in matters of sustainability.

This “Corporate Sustainability Due Diligence Directive” defines what big companies must do to avoid damaging the environment and uphold human rights when making their products. This includes understanding better how their supply chains work and how their subcontractors in far away countries operate in order to avoid big pollution or, say, child labour.

Adrian VAZQUEZ (Ciudadanos, Spain), Renew Europe's negotiator for this text in the Legal Affairs Committee (JURI) and during last night's trilogue, said: “France and Germany already had such domestic laws. The Netherlands and other EU countries were considering introducing some too. It was high-time we gave EU-wide rules to provide legal certainty to EU businesses operating across borders. The new rules will also apply to American, Chinese or Indian companies operating in the EU market”.

Renew Europe pushed for ambitious but pragmatic rules. While other Parliament groupings tended to either side with business or NGOs, Renew Europe held the middle throughout negotiations. “We proved one can be pro-business and pro-human rights and the environment. In fact, the two go hand in hand. Customers across the world no longer want products made with the sweat of children or the remaining trees of virgin forests. Our companies now have a normative advantage. We are helping them to frame their decision in terms of human rights, climate and environmental impact and avoid reputational risks”, added Renew Europe's shadow rapporteur.

The text was first proposed by a Renew Europe commissioner. “Much credit should be given to Didier Reynders who propelled that piece of legislation into existence”, Adrian Vazquez concluded.

Background:

• This directive will apply to all "very large" companies of over 500+ employees and 150 million turnover a year to "large" companies of over 250+ employees and 40 million turnover operating in "high risk sectors" such as textile, mining, agriculture.

• Sanctions for breach of due diligence obligations could go up to 5% of the companies’ worldwide turnover

• The new rules will be applied as soon as 2027 for the biggest of companies.