Annexes to COM(2022)71 - Corporate Sustainability Due Diligence - Main contents

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dossier	COM(2022)71 - Corporate Sustainability Due Diligence.
document	COM(2022)71
date	February 23, 2022

annex of this Directive) on just and favourable conditions at work including safe and healthy working conditions.
(41) It is recalled that as regards corporate governance measures, the EU has already legislated based on the same legal basis, e.g. Shareholders Rights Directives I and II.
(42) See e.g. Case C 380/03 Germany v Parliament and Council [2006] ECR I-11573, paragraph 38 and the case-law cited.
(43) See footnote 3. As regards EEA countries, Norway has adopted due diligence legislation.
(44) Austria, Belgium, Denmark, Finland, Italy, Luxembourg, the Netherlands (regarding broader legislation on responsible business conduct). There are civil society campaigns in favour of introducing due diligence legislation ongoing in Ireland, Spain and Sweden. Annex 8 of the Impact Assessment accompanying this proposal provides a detailed overview on Member State/EEA laws and initiatives.
(45) French Loi Pacte.
(46) For example the Netherlands.
(47) See the German Sorgfaltspflichtengesetz).
(48) For instance, the Dutch law referred to above sets up horizontal mandatory due diligence for child labour concerns through the whole value chain. In Austria, a political party referred a draft bill on social responsibility regarding forced and child labour in the garment sector.
(49) The French Loi relative au devoir de vigilance and the German Sorgfaltspflichtengesetz differ considerably in terms of personal scope material requirements and enforcement regime.
(50) For instance, pursuant to the German Sorgfaltspflichtengesetz, any company with a branch office and at least 3000 employees in Germany (1000 as from 2024) fall within the scope of the law.
(51) The French Loi relative au devoir de vigilance includes a provision on civil liability. The German Sorgfaltspflichtengesetz clarifies that a violation of an obligation under the law does not give rise to any civil liability while general liability rules remain unaffected. Moreover national civil liability legislations are not harmonized.
(52) United Nations Framework Convention on Climate Change
(53) This number comes from the Impact Assessment of the Shareholders Rights Directive II.
(54) E.g. food producer Danone has recently been forced to cut costs by investors on grounds of lack of short-term profitability, see article Can Anglo-Saxon activist investors whip Danone into shape?, available at https://www.economist.com/business/2021/02/20/can-anglo-saxon-activist-investors-whip-danone-into-shape .
(55) See footnote 3.
(56) See footnote 48.
(57) In 2014, the UN Human Rights Council decided to establish an open-ended intergovernmental working group (OEIGWG) on transnational corporations and other business enterprises with respect to human rights, whose mandate shall be to elaborate an international legally binding instrument (LBI) to regulate, in international human rights law, the activities of transnational corporations and other business enterprises. In 2021, the OEIGWG released a third revised draft LBI on business activities and human rights , including due diligence measures and corporate liability for human rights abuses.
(58) Large limited liability companies with more than 500 employees and a net turnover of more than EUR 150 million.
(59) Large limited liability companies with more than 250 employees and a net turnover of more than EUR 40 million but not simultaneously exceeding both the 500 employee and the net turnover EUR 150 million net turnover thresholds, as well as third-country companies of a comparable legal form with a net EU turnover of EUR 40 to 150 million.
(60) The OECD developed such sectoral guidance in order to promote the effective observance of OECD Guidelines on Multinational Enterprises. See the list of sectoral guidance documents at: http://mneguidelines.oecd.org/sectors/.
(61) For the Union see for example Article 5 of the Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized companies (2003/361/EC) (OJ L 124, 20.5.2003, p. 36).
(62) In group 1: 9 400 companies, in group 2: 3 400 companies.
(63) In group 1: 2 600 companies, in group 2: 1 400 companies. The methodology used for calculating the number of third-country companies is explained in the accompanying Staff Working Document.
(64) Summary of the open public consultation for the initiative on sustainable corporate governance, available at https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12548-Sustainable-corporate-governance/public-consultation_en .
(65) For instance, in response to the open public consultation, NGOs supported the need for action with 95.9%, companies with 68.4% (large companies with 75.5%, SMEs with 58.7 %) and business associations with 59.6 %.
(66) While 97.2% of NGOs preferred a horizontal approach, overall companies did so with 86.8%, including SMEs (81.8%), as well as business association (85.3%). This is true also for Member States respondents.
(67) 97 % of respondents agreed to this statement (NGOs 96.1%, business associations 96.5%, companies 93.8%, including SMEs 86.4%). All Member State respondents agree with this statement as well.
(68) It was followed by the option of judicial enforcement with liability (49%) and supervision by competent national authorities based on complaints about non-compliance with effective sanctions (44%).
(69) See reference in footnote 8.
(70) European Commission, Directorate-General for Justice and Consumers, Study on directors’ duties and sustainable corporate governance: final report, Publications Office, 2020, https://data.europa.eu/doi/10.2838/472901 . https://data.europa.eu/doi/10.2838/472901 .
(71) SEC(2022)95
(72) See footnote 6.
(73) OJ C , , p. .
(74) Communication from the Commission to the European Parliament the European Council, the Council, the European Economic and Social Committee and the Committee of the Region “The European Green Deal” (COM/2019/640 final).
(75) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – A Strong Social Europe for Just Transitions (COM/2020/14 final).
(76) Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee on decent work worldwide for a global just transition and a sustainable recovery, COM(2022) 66 final.
(77) ‘Enterprise Models and the EU agenda’, CEPS Policy Insights, No PI2021-02/ January 2021.
(78) E.g. https://www.economie.gouv.fr/entreprises/societe-mission
(79) United Nations’ “Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework”, 2011, available at https://www.ohchr.org/documents/publications/guidingprinciplesbusinesshr_en.pdf .
(80) OECD Guidelines for Multinational Enterprises, 2011 updated edition, available at http://mneguidelines.oecd.org/guidelines/. https://mneguidelines.oecd.org/mneguidelines/
(81) OECD Guidance on Responsible Business Conduct, 2018, and sector-specific guidance, available at https://www.oecd.org/investment/due-diligence-guidance-for-responsible-business-conduct.htm .
(82) The International Labour Organisation’s “Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, Fifth Edition, 2017, available at: https://www.ilo.org/empent/Publications/WCMS_094386/lang--en/index.htm .
(83) https://www.un.org/ga/search/view_doc.asp?symbol=A/RES/70/1&Lang=E .
(84) https://unfccc.int/files/essential_background/convention/application/pdf/english_paris_agreement.pdf .
(85) Glasgow Climate Pact, adopted on 13 November 2021 at COP26 in Glasgow, https://unfccc.int/sites/default/files/resource/cma2021_L16_adv.pdf . https://unfccc.int/sites/default/files/resource/cma2021_L16_adv.pdf .
(86)

   Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’) PE/27/2021/REV/1 (OJ L 243, 9.7.2021, p. 1).

(87) SWD/2020/176 final.
(88) COM/2019/640 final.
(89) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Forging a climate-resilient Europe – the new EU Strategy on Adaptation to Climate Change (COM/2021/82 final), available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2021:82:FIN.
(90) OJ C […], […], p. […].
(91)

   Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on A new Circular Economy Action Plan For a cleaner and more competitive Europe (COM/2020/98 final).

(92)

   Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the EU Biodiversity Strategy for 2030 Bringing nature back into our lives (COM/2020/380 final).

(93)

   Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on A Farm to Fork Strategy for a fair, healthy and environmentally-friendly food system (COM/2020/381 final).

(94)

   Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the    Chemicals Strategy for Sustainability Towards a Toxic-Free Environment (COM/2020/667 final).

(95) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Updating the 2020 New Industrial Strategy: Building a stronger Sing le Market for Europe’s recovery (COM/2021/350 final).
(96) Industry 5.0; https://ec.europa.eu/info/research-and-innovation/research-area/industrial-research-and-innovation/industry-50_en
(97) https://op.europa.eu/webpub/empl/european-pillar-of-social-rights/en/
(98) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Trade Policy Review – An Open, Sustainable and Assertive Trade Policy (COM/2021/66/final).
(99) Joint Communication to the European Parliament and the Council on the EU Action Plan on Human Rights and Democracy 2020-2024 (JOIN/2020/5 final).
(100)    European Parliament resolution of 10 March 2021 with recommendations to the Commission on corporate due diligence and corporate accountability (2020/2129(INL)), P9_TA(2021)0073, available at https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2020/2129(INL) .
(101)    Council Conclusions on Human Rights and Decent Work in Global Supply Chains, 1 December 2020 (13512/20).
(102)    Joint declaration of the European Parliament, the Council of the European Union and the European Commission on EU Legislative Priorities for 2022, available at https://ec.europa.eu/info/sites/default/files/joint_declaration_2022.pdf .
(103)    Directive (EU) 2018/957 of the European Parliament and of the Council of 28 June 2018 amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services (OJ L 173, 9.7.2018, p. 16).
(104)     https://www.ungpreporting.org/wp-content/uploads/UNGPReportingFramework_withguidance2017.pdf .
(105)     https://www.ohchr.org/Documents/Issues/Business/RtRInterpretativeGuide.pdf . https://www.ohchr.org/Documents/Issues/Business/RtRInterpretativeGuide.pdf .
(106)    Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (OJ L 305, 26.11.2019, p. 17).
(107)    OJ L 123, 12.5.2016, p. 1.
(108)    Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) OJ L 119, 4.5.2016, p. 1–88.
(109)    Regulation (EU) 2018/1725 of the European Parliament and of the Council of 23 October 2018 on the protection of natural persons with regard to the processing of personal data by the Union institutions, bodies, offices and agencies and on the free movement of such data (OJ L 295, 21.11.2018, p. 39).
(110)    Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings (OJ L 182, 29.6.2013, p. 19).
(111)    Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).
(112)    Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349).
(113)    Regulation (EU) No 345/2013 of the European Parliament and of the Council of 17 April 2013 on European venture capital funds (OJ L 115, 25.4.2013, p. 1).
(114)    Regulation (EU) No 346/2013 of the European Parliament and of the Council of 17 April 2013 on European social entrepreneurship funds (OJ L 115, 25.4.2013, p. 18).
(115)    Regulation (EU) 2015/760 of the European Parliament and of the Council of 29 April 2015 on European long-term investment funds (OJ L 123, 19.5.2015, p. 98).
(116)    Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009, p. 32).
(117)    Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1).
(118)    Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37).
(119)    Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (OJ L 166, 30.4.2004, p. 1).
(120)    Regulation (EC) No 987/2009 of the European Parliament and of the Council of 16 September 2009 laying down the procedure for implementing Regulation (EC) No 883/2004 on the coordination of social security systems (OJ L 284, 30.10.2009, p. 1).
(121)    Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1).
(122)    Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 (OJ L 257, 28.8.2014, p. 1).
(123)    Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012 (OJ L 347, 28.12.2017, p. 35).
(124)    Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, p. 35).
(125)    Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC (OJ L 267, 10.10.2009, p. 7).
(126)    Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937 (OJ L 347, 20.10.2020, p. 1).
(127)    COM/2020/593 final.
(128)    Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004, p. 38).
(129)    Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (OJ L 243, 11.9.2002, p.1).
(130) +    OJ: Please insert in the text the number and the date of the Directive contained in document ... and insert the OJ reference of that Directive in the footnote.