New rules fostering sustainable and responsible corporate behaviour enter into force

Today, new rules establishing a corporate due diligence duty enter into force. The corporate sustainability due diligence Directive aims to ensure that large companies contribute to the green transition towards a climate-neutral Europe, and actively identify and address human rights concerns within their operations and across their global value chains. With the new rules businesses are required to address adverse impacts of their operations, including those of their subsidiaries and business partners, on human rights and the environment. Additionally, companies must adopt and put into effect a transition plan for climate change mitigation aligned with the Paris Agreement and the 2050 climate neutrality objective, including intermediate targets under the European Climate Law. By obliging large companies to take responsibility for harm to human rights and the environment, people and nature will be better protected, while businesses will benefit from better risk management, increased resilience, greater consumer trust and a uniform legal framework in the EU, making them attractive to sustainability-oriented investors and talent. The new rules will provide consumers with more transparency, allowing them to make informed choices, and give victims of harm better access to justice and remedies. By setting out obligations along the global supply chain, the Directive will have an international impact, improving living conditions, bettering protection of human rights and the environment, and driving sustainable investments towards value chain companies beyond the EU. The rules directly target companies of more than 1 000 employees with a turnover of more than €450 million and their activities. The Directive includes measures to facilitate compliance by the large companies within scope, as well as support and protections for smaller business partners that may be indirectly impacted. The Commission will adopt guidelines and accompanying measures to support effective implementation. More information can be found here.