Jurisdiction
For products sold in EU
Law Summary
Recently approved (final steps pending as of early 2025), this Directive mandates large EU and non-EU companies integrate human rights and environmental due diligence into policies. Requires identifying, preventing, and mitigating adverse impacts in operations, subsidiaries, and value chains, plus adopting climate transition plans.
Law Obligation
Companies will have to carry out due diligence to identify, prevent and mitigate actual and potential adverse impact on human rights and the environment resulting from their upstream and certain downstream business activities (that includes their own operations, that of their subsidiaries and direct and indirect business partners).
- Member states are required to set up penalty systems, including financial penalties, for breaches. These will be calculated based on the company’s global net turnover, with a maximum limit set at 5%. On civil liability, the agreement establishes five years for victims to bring claims (including trade unions or civil society organisations)
EU governments will create practical portals for companies’ due diligence obligations.
- Adopt a due diligence policy that outlines the company’s approach to due diligence and a Code of Conduct
- Identify actual and potential adverse human rights and environmental impacts arising from their operations, subsidiaries and direct and indirect business relationships within their value chain
- Prevent or mitigate potential adverse impacts, and end or minimise real adverse impacts. Develop and implement a prevention action plan
- Communicate relevant due diligence information via their annual reports
- Conduct periodic assessments of the implementation of the due diligence measures, at least every 12 months
- Establish a complaints procedure to enable affected persons or organisations to submit complaints relation to real/ potential adverse impacts
