EU Council approves corporate sustainability due diligence directive

Article From：fibre2fashion

 

 

The European Council has formally adopted the corporate sustainability due diligence directive, marking the final step in the decision-making procedure. This directive introduces stringent obligations for large companies concerning the adverse impacts of their activities on human rights and environmental protection. It also outlines the liabilities linked to these obligations, covering not only the companies' own operations but also those of their subsidiaries and business partners along the entire chain of activities.

 

The directive will apply to companies with more than 1,000 employees and a turnover exceeding €450 million (approximately $488 million). It encompasses a broad range of activities, from the upstream production of goods to the downstream distribution, transport, and storage of products. Companies falling under this legislation will be required to implement a risk-based system to monitor, prevent, and remedy human rights or environmental damages identified by the directive, the European Council said in a press release.

 

Key requirements include ensuring that human rights and environmental obligations are respected throughout the entire chain of activities. In cases where violations are identified, companies must take appropriate measures to prevent, mitigate, end, or minimise the adverse impacts arising from their operations, subsidiaries, and business partners. Companies will be held liable for any damage caused and will be required to provide full compensation. Additionally, affected companies must adopt and implement a climate transition plan in line with the Paris Agreement on climate change.