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European Commission: Corporate Sustainability Due Diligence proposal

07/03/22

The European Commission has adopted a proposal for a Directive on corporate sustainability due diligence that will require companies to: 

  • Integrate due diligence into policies and decision-making;
  • Identify, prevent, mitigate, and minimise actual or potential adverse human rights and environmental impacts;
  • Establish and maintain a complaints procedure;
  • Monitor the effectiveness of the due diligence policy and measures;
  • Adopt a plan to ensure that the business model and strategy of the company are compatible with the limiting of global warming to 1.5 °C and link this plan to directors" remuneration schemes.

The proposal also introduces obligations for directors to establish and supervise the implementation of due diligence and to integrate it into the company's strategy. In this respect, the responsibility of directors is also extended, and rights of action are granted to all stakeholders - broadly defined as any party involved.