EU Publishes Draft for Due Diligence of Corporate Sustainability

On February 23rd, The European Commission published a draft for a Directive on corporate sustainability due diligence. The proposal indicates that companies of a certain size and market will have to establish due diligence policies, monitor the effectiveness of the due diligence policies, and publicly communicate due diligence for their supply chains.

The draft encourages due diligence policies that identify “actual or potential adverse impacts of sustainability, including human rights, climate change, and environmental consequences,” per the regulation. Once identified, the draft dictates that any potential adverse impacts be prevented or mitigated and that actual adverse impacts must be ended and their extent minimized.

This proposal also sets out the creation of a complaints procedure that each company must adopt. This procedure affords the opportunity to a formalized complaints process by affected persons, trade unions and other worker representation, and civil society organizations. Complainants would be able to request follow up and have access to meet with a company’s representatives “at an appropriate level.” This assures any and all stakeholders to your company’s sustainability goals would also have access to your company’s complaint procedure.

Sustainability is an emerging corporate area that governs how a company addresses the issues of climate change, human trafficking and modern slavery, environmental impact of operations and products, and more within the context of the company’s own impact to these areas. Many companies have already adopted and published various policies and guidelines to areas of sustainability. The draft regulation intends to require due diligence to show that the policies are effective and the corporations remain accountable.

Next steps for this proposal involve presentation to the European Parliament and European Council. If approved, EU Member States will have two years to sign the Directive into their own laws.

The European Commission’s Proposal for a Directive on corporate sustainability due diligence and annex may be found here.