Changes from report parliamentary committee draft to plenary report

RemovedRecital 47: (47) In order to mitigate financial or administrative burden on SMEs, many of which are already struggling in the context of the global economic and sanitary crisis, Member States should set up and operate, either individually or jointly, dedicated user-friendly websites, portals or platforms, and Member States could also financially support SMEs and help them build capacity. Member States should also ensure that training on how to perform due diligence is made available for companies, especially SMEs. Such support should also be made accessible, and where necessary adapted and extended to upstream economic operators in third countries. Companies whose business partner is an SME, are also encouraged to support them to comply with due diligence measures, in case such requirements would jeopardize the viability of the SME and use fair, reasonable, non-discriminatory and proportionate requirements vis-a-vis the SMEs.

AddedRecital 44 d (new): (44d) Strategic lawsuits against public participation are a particular form of harassment brought against natural or legal persons to prevent or penalise speaking up on issues of public interest. Member States should provide necessary safeguards to address those manifestly unfounded claims or abusive court proceedings against public participation in accordance with national and EU legislation.

RemovedRecital 50: (50) In order to ensure that this Directive effectively contributes to combating climate change, companies should adopt and effectively implement a plan, in consultation with stakeholders, to ensure that the business model and strategy of the company are aligned with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement, the objective of achieving climate neutrality by 2050 and the 2030 climate target established in Regulation (EU) 2021/1119, and pursuant to the latest recommendations of the Intergovernmental Panel on Climate Change (IPCC) and the European Scientific Advisory Board on Climate Change established by that Regulation, taking into account their entire value chain.

AddedRecital 45: (45) In order to give companies tools to help them comply with their due diligence requirements through their value chain, the Commission, in consultation with Member States and relevant stakeholders, should provide guidance on model contractual clauses, which can be used voluntarily by companies as a tool to help fulfil their obligations in Articles 7 and 8. Such contractual clauses should stipulate, as a minimum, a clear allocation of tasks between contracting parties in ongoing cooperation, that they can not result in the transfer of responsibility for carrying out due diligence, and that, when such clauses are breached, companies should avoid terminating such clauses by first taking appropriate measures in line with Articles 7 and 8 of this Directive. The guidance should further clarify that the simple inclusion of contractual assurances cannot, on its own, satisfy the due diligence standards of this Directive. Such standards should only be satisfied if due diligence obligations are assigned to others in a diligent manner that ensures the effective performance of those obligations and includes measures appropriate to the circumstances, such as monitoring, financial and non-financial assistance, and responsible purchasing practices.

RemovedRecital 51: (51) With a view to increasing the financial incentives of directors, a significant portion of directors’ variable remuneration should be linked to the achievement of sustainability and in particular greenhouse gas emission reduction targets.

AddedRecital 46: (46) In order to provide support and practical tools to companies or to Member State authorities on how companies should fulfil their due diligence obligations, the Commission, using relevant international guidelines and standards as a reference, and in consultation with Member States, the European cross-industry and sectoral social partners and other relevant stakeholders, including civil society organisations, the European Union Agency for Fundamental Rights, the European Environment Agency, the European Labour Authority, the European External Action Service, the European Innovation Council and the Small and Medium-Sized Enterprises Executive Agency (EISMEA), the European Food Safety Authority, and where appropriate the OECD and other international bodies having expertise in due diligence, should issue clear and easily understandable guidelines, including general and sector specific guidance, in order to facilitate compliance in a practical manner.

RemovedRecital 53: (53) In order to ensure the monitoring of the correct implementation of companies’ due diligence obligations and ensure the proper enforcement of this Directive, Member States should designate one or more national supervisory authorities. These supervisory authorities should be of a public nature, independent from the companies falling within the scope of this Directive or other market interests, and free of conflicts of interest. In accordance with national law, Member States should ensure appropriate financing of the competent authority. They should be entitled to carry out investigations, including on-the-spot checks and interviews of relevant stakeholders, in particular trade unions and workers’ representatives, on their own initiative or based on complaints or substantiated concerns raised under this Directive. Where competent authorities under sectoral legislation exist, Member States could identify those as responsible for the application of this Directive in their areas of competence. They could designate authorities for the supervision of regulated financial undertaking also as supervisory authorities for the purposes of this Directive.

AddedRecital 46 a (new): (46a) In order to support companies fulfilling their due diligence obligations along their value chain, the European Commission should conduct further research on digital tools and promote them.

RemovedRecital 56: (56) In order to ensure effective compensation of victims of adverse impacts, Member States should be required to lay down rules governing the civil liability of companies for damages arising due to its failure to comply with the due diligence process. The company should be liable for damages if they failed to comply with the obligations to prevent and mitigate potential adverse impacts or to bring actual impacts to an end and mitigate their extent, or provide remediation, and as a result of this failure the company caused or contributed to an adverse impact that should have been identified, prevented, mitigated, remediated, brought to an end or its extent minimised through the appropriate measures, and led to damage.

AddedRecital 47: (47) Although SMEs are not included in the scope of this Directive, they could be impacted by its provisions as contractors or subcontractors to the companies which are in the scope. The aim is nevertheless to mitigate financial or administrative burden on SMEs, many of which are already struggling in the context of the global economic and sanitary crisis. In order to support SMEs, Member States, with the support of the Commission, should set up and operate, either individually or jointly, dedicated user-friendly websites, portals or platforms, and Member States should also financially support SMEs and help them build capacity. Such support should also be made accessible, and where necessary adapted and extended to upstream economic operators in third countries. Companies whose business partner is an SME, are also encouraged to support them to comply with due diligence measures and use fair, reasonable, non-discriminatory and proportionate requirements vis-a-vis the SMEs. SMEs should also have the possibility to apply this Directive on a voluntary basis and should for that purpose be supported through adequate measures and tools, and be incentivised.

RemovedRecital 57: (57) Where a company can demonstrate that it complied with its obligations under this Directive, it should not be liable for damage resulting from the impact, unless it was unreasonable, in the circumstances of the case, to expect that the action actually taken, including as regards verifying compliance, would be an appropriate measure to prevent, mitigate, bring to an end or mitigate the extent of the adverse impact. In the assessment of the existence and extent of liability, due account should be taken of the company’s efforts, insofar as they relate directly to the damage in question, to take remedial action, including that required of them by a supervisory authority, any investments made and any targeted support provided as well as any collaboration with affected stakeholders and other entities to address adverse impacts in its value chains.

AddedRecital 48: (48) In order to complement Member State support to companies in their implementation, including SMEs, the Commission should build on existing EU tools, projects and other actions helping with the due diligence implementation in the EU and in third countries. It should set up new support measures that provide help to companies, including SMEs on due diligence requirements, including an observatory for value chain transparency and the facilitation of joint stakeholder initiatives.

RemovedRecital 58: (58) Considering that victims and claimants will often lack the necessary access to evidence, where a claim is brought against a company and a claimant provides elements substantiating the likelihood of a company’s liability under this Directive, the company will be responsible for producing evidence to prove it complied with the Directive.

AddedRecital 49: (49) The Commission and Member States should continue to work in partnership with third countries to support upstream economic operators build the capacity to effectively prevent and mitigate adverse human rights and environmental impacts of their operations and business relationships, paying specific attention to the challenges faced by smallholders. They should use their neighbourhood, development and international cooperation instruments, including Free Trade Agreements, to support third country governments and upstream economic operators in third countries addressing adverse human rights and environmental impacts of their operations and upstream business relationships. This could include working with partner country governments, the local private sector and stakeholders on addressing the root causes of adverse human rights and environmental impacts.

RemovedRecital 59: (59) As regards civil liability rules, the civil liability of a company for damages arising due to its failure to carry out adequate due diligence should be without prejudice to civil liability of its subsidiaries or the respective civil liability of direct and indirect business partners in the value chain. Also, the civil liability rules under this Directive should be without prejudice to Union or national rules on civil liability, including rules on joint and several liability, related to adverse human rights impacts or to adverse environmental impacts that provide for liability in situations not covered by or providing for stricter liability than this Directive.

AddedRecital 50: (50) In order to ensure that this Directive effectively contributes to combating climate change, companies should in consultation with stakeholders adopt and implement a transition plan in line with the reporting requirements in Article 19a of Directive (EU) 2022/2464 (CSRD) to ensure that the business model and strategy of the company are aligned with the objectives of the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement, as well as the objective of achieving climate neutrality by 2050 as established in Regulation (EU) 2021/1119 (European Climate Law), and the 2030 climate target. The plan should take into account the value chain and include time-bound targets related to their climate objectives for scope 1, 2 and, where relevant, 3 emissions, including, where appropriate, absolute emission reduction targets for greenhouse gas including, where relevant, methane emissions, for 2030 and in five-year steps up to 2050 based on conclusive scientific evidence, except where a company can demonstrate that its operations and value chain do not cause greenhouse gas emissions and that such emission reduction targets would therefore not be appropriate. The plans should develop implementing actions to achieve the company’s climate targets and be based on conclusive scientific evidence, meaning evidence with independent scientific validation that is consistent with the limiting of global warming to 1.5°C as defined by t…

RemovedRecital 63: (63) In all Member States’ national laws, directors owe a duty of care to the company. In order to ensure that this general duty is understood and applied in a manner which is coherent and consistent with the due diligence obligations and the plans to combat climate change introduced by this Directive and that directors systematically integrate sustainability matters in their decisions, this Directive should clarify, in a harmonised manner, the general duty of care of directors to act in the best interest of the company, by laying down that directors integrate in their decision-making and assess the sustainability matters as referred to in Directive 2013/34/EU, including, where applicable, human rights, good governance, climate change and environmental consequences, including in the short, medium and long term horizons. Such clarification does not require changing existing national corporate structures.

AddedRecital 51: (51) Transition plans should include clear obligations for directors and board members to ensure that environmental and climate risks and impacts are addressed in the company’s strategy. With a view to increasing the financial incentives of directors, companies with more than 1000 employees on average should have a relevant and effective policy in place to ensure that a part of the directors’ variable remuneration is linked to the achievement of the targets of the company’s transition plan for combating climate change.

RemovedRecital 64: (64) Responsibility for due diligence and plans to combat climate change should be assigned to the company’s directors, in line with the international due diligence frameworks. Directors should therefore be responsible for putting in place and overseeing the due diligence actions and plans to combat climate change as laid down in this Directive and for adopting the company’s due diligence policy and plan to combat climate change, taking into account the input of stakeholders and civil society organisations and integrating due diligence into corporate management systems. Directors should also adapt the corporate strategy to actual and potential impacts identified and any due diligence measures taken.

AddedRecital 53: (53) In order to ensure the monitoring of the correct implementation of companies’ due diligence obligations and ensure the proper enforcement of this Directive, Member States should designate one or more national supervisory authorities. These supervisory authorities should be of a public nature, independent from the companies falling within the scope of this Directive or other market interests, and free of conflicts of interest. In accordance with national law, Member States should ensure appropriate financing of the competent authority. They should be entitled to carry out investigations, including, where appropriate, on-site inspections and hearing of relevant stakeholders, on their own initiative or based on grievances or substantiated concerns raised under this Directive. Where competent authorities under sectoral legislation exist, Member States could identify those as responsible for the application of this Directive in their areas of competence. They could designate authorities for the supervision of regulated financial undertaking also as supervisory authorities for the purposes of this Directive. Member States, when designating supervisory authorities and defining the procedures by which they operate, should ensure coordination and complementarity with other processes available under other international instruments, such as the non-judicial grievance mechanism operated by National Contact Points.

RemovedArticle 1 – title: Subject matter and aim

AddedRecital 54: (54) In order to ensure effective enforcement of national measures implementing this Directive, Member States should provide for dissuasive, proportionate and effective sanctions for infringements of those measures. In order for such sanction regime to be effective, administrative sanctions to be imposed by the national supervisory authorities should include pecuniary sanctions, a public statement indicating that the company is responsible and the nature of the infringement, obligations to perform an action including ceasing the conduct constituting the infringement and desisting from any repetition of that conduct, and suspension of products from free circulation or export. Where the legal system of a Member State does not provide for administrative sanctions as foreseen in this Directive, the rules on administrative sanctions should be applied in such a way that the sanction is initiated by the competent supervisory authority and imposed by the judicial authority. Therefore, it is necessary that those Member States ensure that the application of the rules and sanctions has an equivalent effect to the administrative sanctions imposed by the competent supervisory authorities.

RemovedArticle 1 – paragraph 1 – subparagraph 1 – point a: (a) on obligations for companies regarding actual and potential adverse impacts on human rights, the environment and good governance, with respect to their own operations, products and services and those of their subsidiaries, and the value chain operations carried out by entities with whom the company has a business relationship and

AddedRecital 54 a (new): (54a) In order to prevent an artificial reduction of potential administrative fines resulting from an ultimate parent company shifting its net worldwide turnover to third entities, Member States should ensure that, with regards to companies referred to in Articles 2(1)(b) and 2(2)(b), administrative pecuniary sanctions are calculated taking into account the consolidated turnover reported by that company.

RemovedArticle 1 – paragraph 1 – subparagraph 1 a (new): The rules provided for under this Directive are aimed at ensuring that companies fulfil their duty to respect human rights, the environment and good governance and that those affected by a failure to respect this duty have access to justice.

AddedRecital 54 b (new): (54b) Under Article 18(2) of Directive 2014/24/EU, Article 36(2) of Directive 2014/25/EU and Article 30(3) of Directive 2014/23/EU, Member States are required to take appropriate measures to ensure compliance with obligations under Union law with regards to procurement and concession contracts. Therefore the Commission should assess whether it is relevant to review these directives to further specify the requirements and measures Member States are to adopt to ensure compliance with the sustainability and due diligence obligations under this Directive throughout procurement and concession processes, from selection to performance of the contract.

AddedRecital 56: (56) In order to ensure effective compensation of victims of adverse impacts, Member States should be required to lay down rules governing the civil liability of companies for damages arising due to its failure to comply with the due diligence process. The company should be liable for damages if they failed to comply with the obligations to prevent and mitigate potential adverse impacts or to bring actual impacts to an end and mitigate them , or provide remediation, and as a result of this failure the company caused or contributed to an adverse impact that should have been identified, prioritised, prevented, mitigated,, brought to an end, remediated or its extent minimised through the appropriate measures, and led to damage. Member States should also make sure that , in case there is no legal successor, the mother companies can be held liable for their subsidiary where the subsidiary is under the scope of this Directive or was at the time of the impact and has been dissolved by the parent company or has dissolved itself intentionally in order to avoid liability, irrespective of any cooperation with the parent company in conducting due diligence.

AddedRecital 57: (57) In the assessment of the existence and extent of liability, due account should be taken of the company’s efforts, insofar as they relate directly to the damage in question, to take remedial action, including that required of them by a supervisory authority, any investments made and any targeted support provided as well as any collaboration with affected stakeholders and other entities to address adverse impacts in its value chains.

AddedRecital 57 a (new): (57a) Moreover, the possibility for a company to prioritise, when necessary, should be taken into consideration for its potential liability under Article 22. Provided that the prioritisation was done faithfully with regard to the severity and likelihood of the adverse impact, a company should not be held liable if an adverse impact arises from an activity or operation that was legitimately not prioritised.

AddedRecital 58: (58) The liability regime does not regulate who should prove that the company’s action was reasonably adequate under the circumstances of the case, however Member States may foresee in their national law that where a claimant provides prima facie elements substantiating the likelihood of the defendant’s liability, the defendant is held liable, unless it can prove that it has complied with its obligations under this Directive.

AddedRecital 59: (59) As regards civil liability rules, the civil liability of a company for damages that it has caused or contributed to arising due to its failure to carry out adequate due diligence should be without prejudice to civil liability of its subsidiaries or the respective civil liability of direct and indirect business partners in the value chain. Also, the civil liability rules under this Directive should not limit companies’ liability under Union or national legal systems, including rules on joint and several liability.

AddedRecital 59 a (new): (59a) The right to an effective remedy is an internationally recognised human right, enshrined in Article 8 of the Universal Declaration of Human Rights, Article 9(3) of the Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters and Article 2(3)of the International Covenant on Civil and Political Rights, and is also a fundamental right of the Union within the meaning of Article 47 of the Charter. Delays and difficulties in accessing evidence, as well as gender disparity, geographical location, vulnerabilities and marginalisation can constitute major practical and procedural obstacles for the persons concerned, hindering their access to an effective remedy without fear of reprisals. Member States should thus ensure that victims have access to an effective remedy and that the costs and the length of the proceedings do not prevent them from access to courts. These measures may, for example, take the form of public funding, including structural support for victims of actual and potential adverse impacts, limitation of applicable court or administrative fees, or access to legal aid.

AddedRecital 59 b (new): (59b) Mandated trade unions, civil society organisations or other relevant actors acting in the public interest, such as National Human Rights Institutions or an Ombudsman, should be able to bring actions before their courts on behalf of a victim or group of victims of adverse impacts, and should have the rights and obligations of a claimant party in the proceedings, without prejudice to existing national law.

AddedRecital 59 c (new): (59c) Limitation periods for bringing civil liability claims for damages should be at least ten years. When setting the starting point of such limitation periods, Member States should consider taking into account the moment the impact causing the damage has ceased and when the victim concerned knew or could be reasonable expected to have known that the damage they suffered was caused by the adverse impact.

AddedRecital 65 a (new): (65a) Human rights and environmental rights defenders are on the front line of the consequences of adverse environmental and human rights impacts worldwide and in the EU, and have been threatened, intimidated, persecuted, harassed or even murdered. Companies should therefore not expose them to any kind of violence.

AddedRecital 69: (69) This Directive is without prejudice to obligations in the areas of human rights, protection of the environment and climate change under other Union legislative acts. If the provisions of this Directive conflict with a provision of another Union legislative act pursuing the same objectives and providing for more extensive or more specific obligations, the provisions of the other Union legislative act should prevail to the extent of the conflict and shall apply to those specific obligations, in those cases where the obligations set out in another legislative act apply to a more specific sector or subject matter. Such acts include, but are not limited to existing as well as future EU legislation regarding timber and deforestation, posting of workers and forced labour.

AddedRecital 70: (70) The Commission should assess and report whether the scope of the Directive should be lowered, in particular for certain sectors, in order to align it to guidance from the Organisation for Economic Cooperation and Development or in light of clear data or evidence on labour exploitation, human rights violations or newly emerging environmental threats, including data from the EBRD, ILO or FRA.

AddedArticle 1 – paragraph 1 – subparagraph 1 – point a: (a) on obligations for companies regarding actual and potential human rights adverse impacts and environmental adverse impacts that they caused, contributed to or are directly linked to, with respect to their own operations, and those of their subsidiaries, and the operations carried out by entities in their value chain with whom the company has a business relationship and

AddedArticle 1 – paragraph 1 – subparagraph 1 – point b: (b) on liability for violations of the obligations mentioned above which led to damage;

RemovedArticle 2 – paragraph 2 – point a: (a) generated a net turnover of more than EUR 40 million in the Union in the financial year preceding the last financial year, including royalties received by themselves or their Union subsidiaries or Union branches through vertical agreements concluded in the Union;

AddedArticle 3 – paragraph 1 – introductory part: 1. For the purpose of this Directive, the following definitions shall apply:

RemovedArticle 2 – paragraph 2 – point b: (b) generated a net turnover of more than EUR 8 million but not more than EUR 40 million in the Union in the financial year preceding the last financial year, including royalties perceived by themselves or their Union subsidiaries or Union branches through vertical agreements concluded in the Union, provided that at least 30 % of its net worldwide turnover was generated in one or more of the sectors listed in paragraph 1, point (b).

AddedArticle 3 – paragraph 1 – point a – point i: (i) a legal person constituted as one of the legal forms listed in Annex I and Annex II to Directive 2013/34/EU of the European Parliament and of the Council110;

RemovedArticle 2 – paragraph 3: 3. For the purposes of paragraph 1, the number of part-time employees shall be calculated on a full-time equivalent basis. Temporary agency workers shall be included in the calculation of the number of employees in the same way as if they were workers employed directly for the same period of time by the company. Employees in third party undertakings with whom the company has entered into a vertical agreement in return for payment of royalties shall also be included in the calculation of the number of employees.

RemovedArticle 3 – paragraph 1 – point a – point i: (i) a legal person constituted as one of the legal forms listed in Annex I and Annex II to Directive 2013/34/EU of the European Parliament and of the Council110 ;

RemovedArticle 3 – paragraph 1 – point c: (c) ‘adverse human rights impact’ means any adverse impact on persons resulting from any action or omission which removes or reduces the ability of an individual or group to enjoy the rights or to be protected by prohibitions enshrined in international conventions and instruments listed in the Annex, Part I, Section 1 and Annex, Part I, Section 2, including the subsequent case law;

AddedArticle 3 – paragraph 1 – point a c (new): (ac) 'asset manager' means an entity as defined by Article 2(f) of Directive 2007/36/EC, within the scope of Article 2 of this Directive;

AddedArticle 3 – paragraph 1 – point g – subparagraph 1 a (new): As regards companies within the meaning of point (a)(iv), ‘value chain’ with respect to the provision of these specific services shall include the activities of the clients directly receiving such financial services provided by financial undertakings pursuant to point (iv) and of other companies belonging to the same group whose activities are linked to the contract in question. The value chain of regulated financial undertakings within the meaning of point (a)-(iv) does not cover households and natural persons or SMEs;

AddedArticle 3 – paragraph 1 – point h: (h) ‘independent third-party verification’ means verification of aspects of the due diligence of a company or parts of its value chain resulting from the provisions of this Directive either by an auditor or an audit firm that is approved in accordance with Article 3 of Directive 2006/43/EC or accredited in a Member State for conducting certifications, or by an independent assurance services provider as defined in Article 2, point (23), of Directive 2006/43/EC accredited in a Member State in accordance with Regulation (EC) No 765/2008 of the European Parliament and of the Council for the specific conformity assessment activity referred to in Article 14(4a) or by an independent third party that is accredited in a Member State for conducting certifications and which is independent from the company, free from any conflicts of interests, has demonstrated experience, expertise and competence in environmental, climate, and human rights matters, and is accountable for the quality and reliability of the audit or assessment, and meets the minimum standards set out in the delegated act as described in Article 14(4a);

AddedArticle 3 – paragraph 1 – point j: (j) ‘industry or multi-stakeholder initiative’ means an initiative that companies participate in, which provides standards, procedures, tools and/or mechanisms, in order to support, monitor, evaluate, certify, and/or verify aspects of their due diligence, or the due diligence conducted by their subsidiaries and/or business relationships. Such initiatives may be developed and overseen by governments, industry associations, groupings of interested organisations, or civil society organisations;

RemovedArticle 4 – paragraph 1 – introductory part: 1. Member States shall ensure that companies conduct due diligence in relation to human rights, the environment, and good governance as laid down in Articles 5 to 11a (‘due diligence’) by carrying out the following actions:

AddedArticle 3 – paragraph 1 – point q c (new): (qc) ‘to contribute to an adverse impact’ means that a company's own activities, in combination with the activities of other entities, cause an impact, or that the activities of the company cause, facilitate or incentivise another entity to cause an adverse impact. The contribution must be substantial, meaning that it does not include minor or trivial contributions. Assessing the substantial nature of the contribution and understanding when the actions of the company may have caused, facilitated or incentivised another entity to cause an adverse impact can involve the consideration of multiple factors. The following factors can be taken into account: / – the extent to which a company may encourage or motivate an adverse impact by another entity, i.e. the degree to which the activity increased the risk of the impact occurring, / – the extent to which a company could or should have known about the adverse impact or potential for adverse impact, i.e. the degree of foreseeability, / – the degree to which any of the company's activities actually mitigated the adverse impact or decreased the risk of the impact occurring. / The mere existence of a business relationship or activities which create the general conditions in which it is possible for adverse impacts to occur does not in itself constitute a relationship of contribution. The activity in question should substantially increase the risk of adverse impact;

RemovedArticle 4 – paragraph 1 – point c a (new): (ca) remedying actual adverse impacts in accordance with Article 8a;

AddedArticle 3 – paragraph 1 – point q d (new): (qd) being ‘directly linked to an adverse impact’ means that there is a relationship between the adverse impact and the company’s products, services or operations through another business relationship and where the company has neither caused nor contributed to the impact. Directly linked is not defined by a direct business relationship. Also, a direct linkage does not imply that the responsibility shifts from the business relationship causing an adverse impact to the company with which it has a linkage;

RemovedArticle 4 – paragraph 1 – point d: (d) establishing or participating in a complaints mechanism in accordance with Article 9;

AddedArticle 3 – paragraph 1 – point q e (new): (qe) ‘risk-based’ means proportionate to the likelihood and severity of potential adverse impacts;

AddedArticle 3 – paragraph 1 – point q f (new): (qf) ‘risk factors’ means company-level risk factors, business model risk factors, geographic risk factors, product and service risk factors and sectoral risk factors;

AddedArticle 3 – paragraph 1 – point q g (new): (qg) ‘severity of an adverse impact’ means the scale, scope and irremediable character of the adverse impact, taking into account the gravity of an adverse impact, including the number of individuals that are or will be affected, the extent to which the environment is or may be damaged or otherwise affected, its irreversibility and the limits on the ability to restore affected individuals or the environment to a situation equivalent to their situation prior to the impact.

AddedArticle 3 – paragraph 1 a (new): 1a. The Commission shall be empowered to adopt delegated acts in accordance with Article 28 to amend the Annex, in order to make sure that it remains consistent with the Union’s objectives on human rights and the environment.

AddedArticle 3 a (new): Article 3a / Single market clause / 1. The Commission and the Member States shall coordinate during the transposition of this Directive and thereafter in view of a full level of harmonisation between Member States, in order to ensure a level playing field for companies and to prevent the fragmentation of the Single Market. / 2. The Commission shall consider, six years after the entry into force of this Directive, whether changes to the level of harmonisation of this Directive are required to ensure a level-playing field for companies in the Single Market, including whether the provisions of this Directive could be converted into a Regulation.

AddedArticle 4 – paragraph 1 – introductory part: 1. Member States shall ensure that companies conduct risk-based human rights and environmental due diligence as laid down in Articles 5 to 11 (‘due diligence’) by carrying out the following actions:

AddedArticle 4 – paragraph 1 – point c a (new): (ca) where necessary, prioritising potential and actual adverse impacts in accordance with Article 8b;

AddedArticle 4 – paragraph 1 – point c b (new): (cb) remedying actual adverse impacts in accordance with Article 8c;

AddedArticle 4 – paragraph 1 – point d: (d) establishing or participating in a notification and non-judicial grievance mechanism in accordance with Article 9;

RemovedArticle 7 – paragraph 1: 1. Member States shall ensure that companies take appropriate measures to prevent, or where prevention is not possible or not immediately possible, adequately mitigate potential adverse human rights impacts, potential adverse environmental impacts, and potential adverse good governance impacts that have been, or should have been, identified pursuant to Article 6, in accordance with paragraphs 1a, 2, 3, 4, 5 and 5a of this Article.

AddedArticle 6 – paragraph 4 a (new): 4a. In the event that not all the necessary information regarding its value chain is available, the company shall explain the efforts made to obtain the necessary information about its value chain, the reasons why not all of the necessary information could be obtained, and its plans to obtain the necessary information in the future.

RemovedArticle 7 – paragraph 1 a (new): 1a. In cases where it is not possible to prevent and mitigate all identified potential impacts simultaneously, companies may prioritise the order in which they take appropriate measures. They shall do so on the basis of the severity and likelihood of impacts and in a manner informed by meaningful engagement with affected stakeholders. The severity of an adverse impact shall be determined based on its gravity, the number of individuals that are or will be affected, or the extent of the environment that is or may be damaged or otherwise affected, its irreversibility and any limits on the ability to restore affected individuals or the environment to a situation equivalent to their situation prior to the impact. The company’s degree of influence, leverage over or proximity to the subsidiaries or entities with which it has a business relationship is not relevant to its prioritisation decisions under this Directive.

AddedArticle 7 – paragraph 1: 1. Member States shall ensure that companies take appropriate measures to prevent, or where prevention is not possible or not immediately possible or has failed, adequately mitigate potential adverse human rights impacts and adverse environmental impacts, that have been, or should have been, identified pursuant to Article 6, in accordance with this Article.

RemovedArticle 7 – paragraph 2 – introductory part: 2. Companies shall be required to take appropriate measures, including the following actions, where relevant to the circumstances:

AddedArticle 7 – paragraph 1 a (new): 1a. For the purposes of this Article, in cases where a company may cause a potential adverse impact, appropriate measures shall be understood as measures which aim to prevent or mitigate a potential adverse impact. In cases where a company may contribute to an adverse impact, appropriate measures shall be understood as measures which aim to prevent or mitigate the contribution to the impact, using or increasing the company’s leverage with other responsible parties to prevent or mitigate the potential adverse impact. In cases where a company’s operations, products or services may be directly linked to an adverse impact through its business relationships with other entities, appropriate measures shall be understood as measures which aim to use or increase the company’s leverage with responsible parties to seek to prevent or mitigate the potential adverse impact and to influence the entity causing the impact.

RemovedArticle 7 – paragraph 2 – point a: (a) where necessary due to the nature or complexity of the measures required for prevention, develop and implement a prevention action plan, with reasonable and clearly defined timelines for appropriate measures and action, and qualitative and quantitative indicators for measuring improvement. The prevention action plan shall be developed in consultation with affected stakeholders;

AddedArticle 7 – paragraph 1 b (new): 1b. For the purposes of this Article, it shall be presumed that financial undertakings are directly linked to an adverse impact in their value chain without causing or contributing to it.

RemovedArticle 7 – paragraph 2 – point b: (b) establish through reasonable and equitable contractual provisions with a partner with whom it has a business relationship that it will participate in carrying out due diligence as outlined in this Directive, and ensure it respects, as necessary, a prevention action plan. Partners with whom the company has a business relationship shall be asked to establish corresponding reasonable and equitable contractual provisions with their partners, to the extent that their activities are part of the company’s value chain (contractual cascading). When such contractual assurances are obtained, paragraph 4 shall apply;

AddedArticle 7 – paragraph 2 – introductory part: 2. Companies shall be required to take appropriate measures, including the following actions, where relevant:

RemovedArticle 7 – paragraph 2 – point c: (c) make necessary modifications, improvements to, or investments in, the company’s own operations, such as into management, production or other operational processes, facilities, products and product traceability, services and skills, in order to prevent or mitigate potential adverse impacts;

AddedArticle 7 – paragraph 2 – point a: (a) where necessary due to the nature or complexity of the measures required for prevention, develop and implement a prevention action plan, with a reasonable and clearly defined timeline for the implementation of appropriate measures and action, and qualitative and quantitative indicators for measuring improvement. The prevention action plan shall be applicable and accurately tailored to the context of companies’ operations and value chain. The development and implementation of a climate transition plan according to Article 15 shall be considered an appropriate measure to prevent environmental adverse impacts related to climate change mitigation pursuant to paragraph 1 of this Article;

RemovedArticle 7 – paragraph 2 – point c a (new): (ca) adapt business models and strategies, including trading, procurement and pricing practices, in order to prevent potential adverse impacts;

AddedArticle 7 – paragraph 2 – point b: (b) consider establishing through contractual provisions with a partner with whom it has a business relationship that it will ensure compliance with the company’s code of conduct and, as necessary, a prevention action plan. Partners with whom the company has a business relationship could be asked to establish corresponding reasonable, non-discriminatory and fair contractual provisions with their partners, to the extent that their activities are part of the company’s value chain. When such contractual assurances are obtained, paragraph 4 shall apply;

RemovedArticle 7 – paragraph 2 – point d: (d) provide targeted and proportionate support for an SME with which the company has a business relationship;

AddedArticle 7 – paragraph 2 – point c: (c) make necessary modifications, improvements to, withdrawals of or investments in, the company’s own operations, such as into management, production or other operational processes, facilities, products and product traceability, projects, services and skills;

RemovedArticle 8 – paragraph 3 – point e: (e) provide targeted and proportionate support for an SME with which the company has a business relationship;

AddedArticle 8 – paragraph 3 – point d a (new): (da) adapt business models and strategies, including purchasing practices, including those which contribute to living wages and incomes for their suppliers, in order to bring to an end or mitigate actual adverse impacts, and develop and use purchase policies that do not encourage actual adverse impacts on human rights or the environment;

RemovedArticle 8 – paragraph 7: deleted

AddedArticle 8 – paragraph 6 – subparagraph 1 a (new): Prior to temporarily suspending commercial relations or terminating the business relationship, companies shall first be required to assess whether the adverse impacts of doing so would be greater than the adverse impact which is intended to be brought to an end or mitigated. Should that be the case, companies may refrain from temporarily suspending commercial relations or terminating the business relationship. Where companies do temporarily suspend commercial relations or terminate the business relationship, they shall take steps to prevent, mitigate or bring to an end the impacts of suspension or termination, provide reasonable notice to the business partner and keep that decision under review.

RemovedArticle 8 a (new): Article 8a / Remedying actual adverse impacts / 1. Member States shall ensure that where a company has, or may have, caused or contributed to an adverse impact, that company shall take appropriate measures to remedy that adverse impact and the possible harm it has caused to people. / 2. Such remedial measures may include, but are not limited to, financial or non-financial compensation, restitution, rehabilitation, public apologies, reinstatement or a contribution to investigations. / 3. Any such remedial measures shall be developed in consultation with all affected stakeholders. / 4. Member States shall ensure that any remedial action does not prevent affected stakeholders from taking further action, including making complaints and commencing civil procedures, and in particular stakeholders affected by an adverse impact shall not be required to seek remediation prior to filing claims in court. / 5. Where a company is directly linked to an adverse impact, Member States shall encourage its voluntary participation in any remedial measures, where appropriate, and encourage companies to consider using their leverage with responsible parties to enable the remediation of any damage caused by an impact.

AddedArticle 8 – paragraph 6 – subparagraph 2: Member States shall provide for the availability of an option to suspend or terminate a business relationship in contracts governed by their laws, except for contracts where the parties are obliged by law to enter into them. Companies may refer to supervisory authorities to receive guidance on the course of action to take.

RemovedArticle 9 – title: Complaints mechanism

AddedArticle 8 – paragraph 7: 7. By way of derogation from paragraph 6, point (b), when companies referred to in Article 3, point (a)(iv), provide financial services to entities that cause or contribute to actual adverse impacts in the meaning of paragraph 1, they shall not be required to terminate the financial service contract, if this is strictly necessary to prevent bankruptcy to the entity to whom that service is being provided. In addition to paragraph 6, second subparagraph, a decision to terminate the financial service contract in derogation from paragraph 6, point (b) may only be taken, as a last resort, if the leverage efforts of companies referred to in Article 3(1), point (a)(iv) have ultimately failed to influence the entity to whom that service is being provided to bring actual adverse impacts to an end or to minimise their extent.

RemovedArticle 9 – paragraph 1: 1. Member States shall ensure that companies establish or participate in effective mechanisms that can be used by persons and organisations listed in paragraph 2 to submit complaints to them where they have legitimate concerns regarding actual or potential adverse human rights, environmental or good governance impacts with respect to the companies’ own operations, the operations of their subsidiaries and their value chains. Member States shall ensure that companies are able to provide such a possibility to submit complaints through collaborative arrangements with other companies or organisations, by participating in multi-stakeholder grievance mechanisms or joining a Global Framework Agreement.

AddedArticle 8 a (new): Article 8a / Appropriate measures by institutional investors and asset managers to induce their investee companies to bring actual adverse impacts caused by them to an end / 1. Member States shall ensure that institutional investors and asset managers take appropriate measures as described in paragraph 3 of this Article to induce their investee companies to bring actual adverse impacts to an end that have been, or should have been identified pursuant to Article 6. / 2. Where the adverse impact cannot be brought to an end, Member States shall ensure that institutional investors and asset managers induce their investee companies to minimise the extent of such an impact. / 3. Where relevant, institutional investors and asset managers shall be required to engage with the investee company and exercise voting rights in line with Article 3g (1), point (a), of Directive 2007/36/EC [SRD2], in order to induce the management body of an investee company to bring the actual impact to and end or minimise its extent. The action sought from the investee company shall be proportionate to the significance and scale of the adverse impact and to the contribution of the investee company’s conduct to the adverse impact. Likewise, the actions required from institutional investors and asset managers shall be proportionate and commensurate, and shall take due account of the degree of control they have over the investee company.

RemovedArticle 9 – paragraph 2 – point b: (b) trade unions and other workers’ representatives, including those representing individuals working in the value chain concerned,

AddedArticle 8 b (new): Article 8b / Prioritising actual and potential adverse impacts / 1. In cases where it is not possible to prevent, bring to an end or mitigate all identified adverse impacts simultaneously through appropriate measures as outlined in Articles 7 and 8, companies may prioritise the order in which they take appropriate measures on the basis of the likelihood and severity of adverse impacts. / 2. Companies shall be required to take appropriate measures as per paragraph 1 according to the severity and likelihood of impacts and taking into account risk factors. / 3. Once the most severe and likely adverse impacts are addressed in accordance with Articles 7 or 8 in a reasonable time, the company shall address less severe and less likely adverse impacts.

RemovedArticle 9 – paragraph 2 – point c: (c) civil society organisations active in the areas related to the value chain concerned, and

AddedArticle 8 c (new): Article 8c / Remediation of actual adverse impacts / 1. Member States shall ensure that where a company has caused or contributed to an actual adverse impact, that company shall take appropriate measures to remediate that adverse impact and the possible harm it has caused to people or the environment, or contribute to its remediation. The remediation may be proposed as a result of a non-judicial grievance procedure as laid down in Article 9. / 2. Such remedial measures shall aim to restore the affected persons and groups or communities and/or the environment to a situation equivalent or as close as possible to their situation prior to the impact. They may include compensation, restitution, rehabilitation, public apologies, reinstatement or a contribution to investigations. Companies shall prevent additional harm being caused. / 3. Member states shall ensure that the single helpdesk as designated pursuant to Article 14a acts as a contact point for due diligence mediation in order to assist companies and stakeholders in finding remedial solutions. In performing those duties, the single helpdesk shall be impartial, predictable and equitable. / 4. Where a company is directly linked to an adverse impact, Member States shall encourage its voluntary participation in any remedial measures, where appropriate, and encourage companies to consider using their leverage with responsible parties to enable the remediation of any damage caused by an impact.

RemovedArticle 9 – paragraph 2 – point c a (new): (ca) legal or natural persons defending human rights, good governance and the environment.

AddedArticle 8 d (new): Article 8d / Carrying out meaningful engagement with affected stakeholders / 1. Member States shall ensure that companies take appropriate measures to carry out meaningful engagement with affected stakeholders that allows for genuine interaction and dialogue in their due diligence process. To this end, the engagement shall cover information and consultation of affected stakeholders and shall be comprehensive, structural, effective, timely and culturally and gender sensitive. / 2. Where it is not possible to carry out meaningful engagement with affected stakeholders, or where engagement with additional expert perspectives is useful to allow the company to comply fully with the requirements of this Directive, in particular in the context of scoping and prioritisation decisions under Article 6, companies shall engage in a meaningful way with other relevant stakeholders, such as civil society organisations, or legal or natural persons defending human rights or the environment in order to gain credible insights into potential or actual adverse impacts, in order to be able to comply with the requirements of this Directive. / 3. Companies shall, as appropriate, provide comprehensive, targeted and relevant information to affected stakeholders about their value chain and their actual or potential adverse impacts on the environment, human rights and good governance. / 4. Affected stakeholders shall be allowed to request additional written information, which shall be provided by the com…

RemovedArticle 9 – paragraph 3 a (new): 3a. Member States shall ensure that when companies establish or participate in complaints mechanisms, those mechanisms are legitimate, accessible, predictable, equitable, transparent, rights-compatible and based on engagement and dialogue. Complaints mechanisms shall be designed and operated in a manner that is informed by the perspectives of stakeholders and adapted to the needs of people who may be most vulnerable to adverse impacts.

AddedArticle 9 – title: Notification and non-judicial grievance mechanism

RemovedArticle 9 – paragraph 3 b (new): 3b. Member States shall ensure companies proactively raise awareness among stakeholders of the existence, objectives and processes of complaints mechanisms. Companies shall take measures to ensure that complainants are free from retaliation or retribution, including by ensuring that complaints can be raised either anonymously or confidentially, as appropriate in accordance with national law, and adopt and implement policies to that effect.

AddedArticle 9 – paragraph 1: 1. Member States shall ensure that companies provide publicly available and effective notification and non-judicial grievance mechanisms at operational level, that can be used by persons and organisations listed in paragraph 2 to notify them of or raise grievances and request remediation, where they have legitimate information or concerns regarding actual or potential adverse human rights or environmental impacts with respect to the companies’ own operations, the operations of their subsidiaries and their value chains. Member States shall ensure that companies are able to provide such a possibility to submit notifications and grievances through collaborative arrangements, including industry initiatives, with other companies or organisations, by participating in multi-stakeholder grievance mechanisms or joining a global framework agreement.

RemovedArticle 9 – paragraph 3 c (new): 3c. Companies shall report on reasonable concerns raised via their grievance mechanisms and regularly report on progress made in those instances. All information shall be published in a manner that does not endanger the stakeholders’ safety, including by not disclosing their identity.

AddedArticle 9 – paragraph 2 – introductory part: (2) Member States shall ensure that the grievances may be submitted by:

RemovedArticle 9 – paragraph 4 – point a: (a) to receive timely and appropriate follow-up on the complaint from the company with which they have filed a complaint pursuant to paragraph 1, providing substantiated reasoning as to whether a claim has been considered founded or unfounded, and

AddedArticle 9 – paragraph 2 – point a: (a) persons who are affected or have reasonable grounds to believe that they might be affected by an adverse impact, and the legitimate representatives of such individuals, or, in cases where there are no individuals, groups or communities affected by an adverse impact on the environment, credible and experienced organisations whose purpose includes the protection of the environment,

RemovedArticle 9 – paragraph 4 – point b: (b) to meet with the company’s representatives at an appropriate level to discuss potential or actual adverse impacts that are the subject matter of the complaint.

AddedArticle 9 – paragraph 2 – point c: deleted

RemovedArticle 9 – paragraph 4 a (new): 4a. Member States shall ensure that supervisory authorities are empowered to issue guidance to companies and other actors responsible for developing and administering complaints mechanisms, including in relation to their compliance with the criteria set out in this Article, in line with relevant international standards.

AddedArticle 9 – paragraph 2 a (new): 2a. Member States shall ensure that notifications may be submitted by the persons and organisations listed in points (a) and (b) of paragraph 2, and in addition, in as far as they are not covered under those points, by the following: / (a) legal or natural persons defending human rights or the environment; / (b) civil society organisations active in the areas related to the value chain concerned.

RemovedArticle 9 – paragraph 4 b (new): 4b. Raising a concern under this Article shall not be a prerequisite nor preclude the claimants from having access to the substantiated concerns procedure under Article 19 nor to judicial or other non-judicial mechanisms.

AddedArticle 9 – paragraph 3: 3. Member States shall ensure that the companies establish a procedure for dealing with notifications and grievances referred to in paragraph 1, including a procedure when the company considers the notifications or grievances to be unfounded, and inform the relevant affected stakeholders, and their representatives where applicable, and other relevant persons or organisations covered by paragraphs 2 and 2a, of those procedures. Member States shall ensure that where the notification or grievance is well-founded, the adverse impact that is the subject matter of the notification or grievance is deemed to be identified within the meaning of Article 6.

RemovedArticle 10 – title: Monitoring and verification

AddedArticle 9 – paragraph 3 a (new): 3a. Member States shall ensure that when companies establish or participate in notification and grievance mechanisms, those mechanisms are legitimate, accessible, predictable, equitable, transparent, rights-compatible, gender- and culturally responsive, and based on engagement and dialogue. Notification and grievance mechanisms shall be designed and operated in a manner that is informed by the perspectives of stakeholders and adapted to the needs of people who may be most vulnerable to adverse impacts. Companies shall adopt and implement policies and processes to maintain the independence of the notification and grievance mechanism.

RemovedArticle 10 – paragraph 1: Member States shall ensure that companies regularly verify and monitor the adequacy and effectiveness of their actions taken in accordance with Article 4. Companies shall be required to carry out monitoring and verification in consultation with affected stakeholders and it shall be based, where possible, on qualitative and quantitative indicators and be carried out at least every 12 months, taking into account the nature, severity and likelihood of the adverse impacts in question and whenever there are reasonable grounds to believe that new risks of the occurrence of those adverse impacts may arise. Where appropriate, the due diligence policy and public communication shall be reviewed and updated in accordance with the outcome of those assessments. Companies shall retain documentation demonstrating their compliance with this Article for 5 years.

AddedArticle 9 – paragraph 3 b (new): 3b. Companies shall take measures to ensure that persons submitting notifications or grievances are free from retaliation or retribution, including by ensuring that notifications and grievances can be raised either anonymously or confidentially, in accordance with national law and adopt and implement policies to that effect. Where information needs to be shared, it shall be in a manner that does not endanger the stakeholders’ safety, including by not disclosing their identity.

RemovedArticle 11 – paragraph -1 (new): Requirements on companies to report on their due diligence process established in Directive 2013/34/EU shall be understood as a requirement for companies to describe how they conduct due diligence as provided for in Article 4. When fulfilling the requirements of Directive 2013/34/EU to report on actions taken to identify potential or actual adverse, companies shall explain whether they prioritised the order in which they took appropriate measures, how that approach was applied, and why it was necessary to prioritise.

AddedArticle 9 – paragraph 3 c (new): 3c. Member States shall ensure that persons submitting grievances under paragraph 2, where they do not do so anonymously, are entitled to receive timely and appropriate follow-up from the company with which they have filed a grievance pursuant to paragraph 1 and shall also be entitled: / (a) to be provided with the reasoning as to whether a grievance has been considered founded or unfounded and provided with information on the steps and actions taken; / (b) to engage with the company’s representatives at an appropriate level to discuss potential or actual adverse impacts that are the subject matter of the grievance; / (c) to request that companies remediate or contribute to the remediation of actual adverse impacts, in line with Article 8c.

RemovedArticle 11 – paragraph 1: Member States shall ensure that companies that are not subject to reporting requirements under Articles 19a and 29a of Directive 2013/34/EU report on the matters covered by this Directive by publishing on their website an annual statement that meets those requirements in a language customary in the sphere of international business, and audited in line with the requirements outlined in Directive 2006/43/EC129a. The statement shall be published by 30 April each year, covering the previous calendar year. / 129a Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC (OJ L 157, 9.6.2006, p. 87).

AddedArticle 9 – paragraph 4 – introductory part: 4. Member States shall ensure that persons submitting notifications under paragraph 2a, where they do not do so anonymously, are entitled to receive timely and appropriate follow-up from the company with which they have filed a notification pursuant to paragraph 1.

RemovedArticle 11 – paragraph 2: The Commission shall adopt delegated acts in accordance with Article 28 concerning the content and criteria for such reporting under paragraph 1, specifying information on the description of due diligence, its design and methodology, potential and actual adverse impacts and actions taken on those.

AddedArticle 9 – paragraph 4 – point a: deleted

RemovedArticle 11 a (new): Article 11a / Consultation of affected stakeholders / 1. Member States shall ensure that companies consult affected stakeholders by carrying out effective, meaningful and informed engagement with them on the actions provided for in Articles 4 to 11. / 2. Companies shall consult affected stakeholders proactively, and shall provide timely and culturally sensitive information to affected stakeholders about their actual or potential adverse impacts on the environment, human rights and good governance, including information about any changes to operations, activities or operating context. Affected stakeholders shall have the right to request additional written information, which shall be provided by the company within a reasonable timeframe and in an appropriate and comprehensible format. If the company refuses a request for additional information, the affected stakeholder shall be entitled to written justification for that refusal. / 3. The consultation of affected stakeholders shall take due account of barriers to participation faced by affected stakeholders and of the specific needs of vulnerable stakeholders. / 4. Workers representatives shall be informed by their company on its due diligence strategy and the implementation thereof, to which they shall be able to contribute, in accordance with Directive 2002/14/EC of the European Parliament and of the Council129a and Directive 2009/38/EC of the European Parliament and of the Council129b, and Council Directive 2001/86/EC of the…

AddedArticle 9 – paragraph 4 – point b: deleted

RemovedArticle 12 – paragraph 1: 1. In order to provide support to companies to facilitate their compliance with Article 7(2), point (b), and Article 8(3), point (c), the Commission shall adopt guidance about voluntary model contract clauses These clauses shall provide for the shared responsibility for due diligence in contractual clauses. Those model contractual clauses shall stipulate, as a minimum: / (a) that the responsibility to undertake due diligence consists of mutual obligations shared between both contracting parties, in ongoing cooperation, and contractual clauses shall not be such as to result in the transfer of responsibility for carrying out due diligence; and / (b) without prejudice to Article 7 (5) and Article 8 (6), that, where due diligence related contractual provisions have been infringed, giving rise to potential adverse impacts, prevention, mitigation and remediation of adverse impacts are to be prioritised over termination or suspension of the contract.

AddedArticle 9 – paragraph 4 a (new): 4a. Member States shall ensure that supervisory authorities are empowered to issue guidance to companies and other relevant actors responsible for developing and administering notification and grievance mechanisms, including in relation to their compliance with the criteria set out in this Article, and in line with relevant international standards.

RemovedArticle 12 – paragraph 1 a (new): 1a. The guidance shall further clarify that contractual provisions cannot, on their own, satisfy the due diligence standards of this Directive.

AddedArticle 9 – paragraph 4 b (new): 4b. The submission of a notification or grievance under this Article shall not be a prerequisite for or preclude the persons submitting them from having access to the substantiated concerns procedure under Article 19 or to judicial or other non-judicial mechanisms, such as the OECD National contact points where they exist.

RemovedArticle 12 – paragraph 1 b (new): 1b. A company concluding contractual terms with a partner with which it has a business relationship shall assess whether the business partner can be reasonably expected to carry out due diligence in accordance with this Directive, and provide the necessary support in order to overcome any organisational or structural impediments.

AddedArticle 10 – title: Monitoring and verifying

RemovedArticle 13 – paragraph 1: In order to provide support to companies or to Member State authorities on how companies should fulfil their due diligence obligations, the Commission, in consultation with Member States, representative SME organisations, business organisations and stakeholders, the European Union Agency for Fundamental Rights, the European Environment Agency, the European Labour Authority and where appropriate with international bodies having expertise in due diligence, shall issue guidelines, including for specific sectors or specific adverse impacts or contexts, such as situations of conflict or occupation. The Commission may also issue guidelines on responsible purchasing practices.

AddedArticle 10 – paragraph 1: Member States shall ensure that companies continuously verify the implementation and monitor the adequacy and effectiveness of their actions taken in accordance with this Directive. Monitoring and verification shall be based, where appropriate, on qualitative and quantitative indicators and be carried out continuously, taking into account the nature, severity and likelihood of the adverse impacts in question and whenever there are reasonable grounds to believe that new risks of the occurrence of those adverse impacts may arise. Where appropriate, the due diligence policy, the prevention action plan and the corrective action plan shall be reviewed and updated in accordance with the outcome of those assessments.

RemovedArticle 14 – paragraph 1: 1. Member States shall, in order to provide information and support to companies and the partners with whom they have business relationships in their value chains in their efforts to fulfil the obligations resulting from this Directive, set up and operate individually or jointly dedicated user-friendly websites, platforms or portals. Specific consideration shall be given, in that respect, to SMEs . Member States shall also ensure that training on how to perform due diligence is made available for companies, especially SMEs.

AddedArticle 11 – paragraph 1: 1. Member States shall ensure that companies that are not subject to reporting requirements under Articles 19a, 29a and 40a of Directive 2013/34/EU report on the matters covered by this Directive by publishing on their website an annual statement in at least one of the official languages of the Union. The statement shall be published no later than 12 months after the balance sheet date of the financial year for which the statement is drawn up. For non-EU companies the statement will include information on the way to contact the company’s authorised representative as defined in Article 16.

RemovedArticle 14 – paragraph 1 a (new): 1a. Member States shall provide support for stakeholders, including for their capacity development, and provide them with information and assistance to facilitate their access to justice.

AddedArticle 11 – paragraph 2: 2. The Commission shall adopt delegated acts in accordance with Article 28 concerning the content and criteria for such reporting under paragraph 1, ensuring that it is consistent with the disclosure requirements for due diligence outlined in Article 40b of Directive 2013/34/EU, and specifying information on the description of due diligence, potential and actual adverse impacts and actions taken on those. This reporting should be sufficiently detailed to demonstrate it complied with the obligations under this Directive. / When adopting delegated acts, the Commission shall ensure that there is no duplication in reporting requirements for companies referred to in Article 3, point (a)(iv), that are subject to reporting requirements and consider principal adverse impacts under Article 4 of Regulation (EU) 2019/2088 of the European Parliament and of the Council, while maintaining in full the minimum obligations stipulated in this Directive. / For companies that do not have a website, Member States shall dedicate a website to the publication of the annual statement of the companies concerned.

RemovedArticle 14 – paragraph 2: 2. Without prejudice to applicable State aid rules, Member States shall provide financial and other support to SMEs, in order to meet the expectations imposed on them under this Directive.

AddedArticle 11 a (new): Article 11a / Accessibility of information on the European Single Access Point (ESAP) / 1. Member States shall ensure that, when making public the annual statements drawn-up pursuant to Article 11(1) of this Directive, companies submit that information at the same time to the collection body referred to in paragraph 3 of this Article for accessibility on ESAP, as established under Regulation (EU) XX/XXXX [ESAP Regulation] of the European Parliament and of the Council1a. / That information shall comply with all of the following requirements: / (a) the information shall be prepared in a data extractable format as defined in Article 2, point (3), of Regulation (EU) XX/XXXX [ESAP Regulation]1b or, where required under Union law, in a machine-readable format, as defined in Article 2, point (13), of Directive (EU) 2019/1024 of the European Parliament and of the Council1c; / (b) the information shall be accompanied by all the following metadata: / (i) all the names of the company to which the information relates; / (ii) the legal entity identifier of the company, as specified pursuant to Article 7(4) of Regulation (EU) XX/XXXX [ESAP Regulation]; / (iii) the size of the company by category, as specified pursuant to Article 7(4) of Regulation (EU) XX/XXXX [ESAP Regulation]; / (iv) the type of information, as classified pursuant to Article 7(4) of Regulation (EU) XX/XXXX [ESAP Regulation]; / (v) the specific period for which the information is to be made publicly available on ESAP, whe…

RemovedArticle 14 – paragraph 3: 3. The Commission may complement Member States’ support measures building on existing Union action to support due diligence in the Union and in third countries and may devise new measures, including facilitation of joint stakeholder initiatives to help companies fulfil their obligations. The Commission and Member States shall develop and strengthen cooperation and partnership mechanisms with third countries to address the root causes of adverse impacts on human rights, the environment and good governance, and build the capacity of upstream economic actors to comply with the requirements under this Directive.

AddedArticle 12 – paragraph 1: In order to provide support to companies to facilitate their compliance with Article 7(2), point (b), and Article 8(3), point (c), the Commission shall, in consultation with Member States and relevant stakeholders, adopt guidance, tailored to the sector and size of companies, about voluntary model contract clauses by the application date of this Directive. Those model contractual clauses shall stipulate, as a minimum:

RemovedArticle 14 – paragraph 4: 4. Companies may use credible industry schemes and multi-stakeholder initiatives to support the implementation of their obligations referred to in Articles 5 to 11 of this Directive to the extent that such schemes and initiatives are appropriate to support the fulfilment of those obligations. The Commission and the Member States may facilitate the dissemination of information on the precise scope, alignment with this Directive, and credibility of such schemes or initiatives and their outcome. The Commission, in collaboration with Member States, shall issue guidance for assessing the fitness of industry schemes and multi-stakeholder initiatives. The company shall be responsible for assessing the reliability and quality of any industry initiative that they use.

AddedArticle 12 – paragraph 1 – point a (new): (a) the clear allocation of tasks between both contracting parties, in ongoing cooperation, and that contractual clauses shall not be such as to result in the transfer of responsibility for carrying out due diligence; and

RemovedArticle 15 – paragraph 1: 1. Member States shall ensure that companies referred to in Article 2, shall adopt and effectively implement a plan to ensure that the business model and strategy of the company are aligned with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement, the objective of achieving climate neutrality by 2050 and the 2030 climate target established in Regulation (EU) 2021/1119, and pursuant to the latest recommendations of the IPCC and the European Scientific Advisory Board on Climate Change. That plan shall be developed in consultation with stakeholders, and the plan and its implementation shall be approved by the company’s shareholders, where applicable. It shall include, in particular:

AddedArticle 12 – paragraph 1 – point b (new): (b) that without prejudice to Article 7 (5) and Article 8 (6), where contractual clauses are breached, companies shall first take appropriate measures in line with Article 7 (4) and Article 8 (5) and shall avoid terminating such clauses.

RemovedArticle 15 – paragraph 1 – point a (new): (a) short, medium and long-term targets related to sustainability matters, including absolute greenhouse gas emission reduction targets for scope 1, 2 and 3 emissions for 2030 and reviewed every five years up to 2050, explaining their alignment with a 1.5⁰c climate scenario with no or limited overshoot and where such targets are based on science, pursuant to the latest recommendations of the IPCC and the European Scientific Advisory Board on Climate Change. Before targets are set, the identification of risks and impacts shall be done beforehand. Companies active in the energy and agricultural sectors shall specify the share of methane emissions, including their methane emissions reduction plan;

AddedArticle 13 – paragraph 1: 1. In order to provide support to companies or to Member State authorities on how companies should fulfil their due diligence obligations, including in relation to rights and protections enshrined in the Annex, the Commission, in consultation with Member States, the European cross-industry and sectoral social partners and other relevant stakeholders, the European Union Agency for Fundamental Rights, the European Environment Agency, the European Labour Authority, the European External Action Service, the European Innovation Council and the Small and Medium-Sized Enterprises Executive Agency (EISMEA), the European Food Safety Authority, and where appropriate the OECD and other international bodies having expertise in due diligence, shall issue clear and easily understandable guidelines, including general and sector- specific guidance, in order to facilitate compliance in a practical manner.

RemovedArticle 15 – paragraph 1 – point b (new): (b) a consideration of the risks and impacts of climate action for the company, an identification of decarbonisation levers within the company’s business and value chain, and related financial and investment plans;

AddedArticle 13 – paragraph 1 a (new): 1a. In order to provide support to companies or to Member State authorities on how companies should fulfil their due diligence obligations, the guidelines shall include: / (a) information on the implementation of the human rights and environmental standards applicable to businesses based on the OECD Guidelines for Multinational Enterprises as clarified in the OECD Due Diligence Guidance for Responsible Business Conduct as well as the UN Guiding Principles on Business and Human Rights; / (b) lists of risk factors and accompanying guidance, including enterprise-level risk factors, geographic risk factors and sectoral risk factors; / (c) sector specific guidance, in particular for the following sector, in line with current or future OECD guidelines: / (i) the manufacture and the wholesale trade and retail of textiles, wearing apparel, fur, leather and related products (including footwear), / (ii) agriculture, water supply, the management of land and resources, including nature conservation, forestry, fisheries (including aquaculture), the rubber industry, the manufacture of food products, marketing and advertising of food and beverages, and the wholesale trade and retail of agricultural raw materials, live animals, animal products, wood, food, and beverages, and waste management, / (iii) mining and quarrying, the extraction, refining, transport and handling of mineral resources regardless from where they are extracted (including crude petroleum, natural gas, coal, lignite, metal…

RemovedArticle 15 – paragraph 1 – point c (new): (c) implementing actions to achieve the company’s climate targets, based on current scientific evidence and data covering their scope 1, 2, and 3 emissions.

AddedArticle 13 – paragraph 1 b (new): 1b. The guidelines shall be made available no later than ... [1 year before the date of entry into force of obligations for companies under this Directive], in free of charge and easily accessible format, including digital, and in all the official languages of the Union. The Commission shall periodically review the relevance of its guidelines and adapt them, including to new best practices.

RemovedArticle 15 – paragraph 2: 2. Member States shall ensure that each company’s plan is evidence-based, regularly updated and is clear, transparent, accurate, comprehensive, comparable and consistent, by following best practices.

AddedArticle 13 – paragraph 1 c (new): 1c. Country fact-sheets shall be updated regularly by the Commission and made publicly available in order to provide up-to-date information on the international Conventions and Treaties ratified by each of the Union’s trading partners. The Commission shall collect and publish trade and customs data on origins of raw materials, and intermediate and finished products, and publish information on human rights, environmental and governance potential or actual adverse impacts risks associated with certain countries or regions, sectors and sub-sectors, and products.

RemovedArticle 15 – paragraph 3: deleted

AddedArticle 14 – paragraph 1: 1. Before the entry into force of this Directive, Member States with the support of the Commission shall develop and implement measures and toolboxes, in order to provide information, advice and support to companies and the partners with whom they have business relationships in their value chains in their efforts to fulfil the obligations resulting from this Directive, and set up and operate individually or jointly dedicated user-friendly websites, platforms or portals. Such information, advice and support shall be practical and tailored to the specific needs of SMEs in particular. Member States shall also ensure that training on how to perform due diligence is made available for companies. In doing so, Member States shall ensure complementarity and coherence with similar measures already in existence, such as information and promotion provided by OECD National Contact Points.

RemovedMoved to Article 26

AddedArticle 14 – paragraph 1 a (new): 1a. The Commission shall establish a dedicated digital portal for companies to access free of charge all templates and information relating to all reporting requirements stemming from this Directive and other Union legislative instruments specific to a particular company based on its size, sector, product and service, risk exposure etc., as well as access to information on funding and tendering opportunities in order to implement, fulfil and profit from their due diligence obligations.

RemovedArticle 16 – paragraph 1: 1. Member States shall ensure that each company referred to in Article 2(2) designates a legal or natural person as its authorised representative, established or domiciled in one of the Member States where it operates. The designation shall be valid when confirmed as accepted by the authorised representative. Member States shall regularly publish an up to date list of authorised representatives under their jurisdiction.

AddedArticle 14 – paragraph 1 b (new): 1b. Member States shall provide information and support for stakeholders and their representatives to exercise their engagement in due diligence, for their capacity development, and provide them with information and assistance to facilitate their access to justice. This shall include legal counsel and setting up and operating individually or jointly dedicated websites, platforms or portals. Member States may also provide financial support to stakeholders for the purpose of raising their awareness and facilitating access to the rights provided to them by this Directive, as well as support and protection for affected stakeholders in relation to potential or actual adverse impacts related to business operations.

AddedArticle 14 – paragraph 2: 2. Without prejudice to applicable State aid rules, Member States shall provide financial and other support to SMEs, where relevant.

AddedArticle 14 – paragraph 3: 3. The Commission shall establish advisors for due diligence under the scope of the Enterprise Europe Network and shall, including in view of ensuring consistency, complement Member States’ support measures building on existing Union action to support due diligence in the Union and in third countries and may devise new measures, including facilitation of joint stakeholder initiatives to help companies fulfil their obligations.

AddedArticle 14 – paragraph 3 a (new): 3a. The Commission and Member States shall ensure that the Union’s cooperation and trade instruments support the development of an enabling environment in third countries, as well as developing and strengthening cooperation and partnership mechanisms with third countries, and relying on existing instruments, to address the root causes of adverse impacts on human rights and the environment , and build the capacity of third country economic actors to respect the environment and human rights.

AddedArticle 14 – paragraph 4: 4. Without prejudice to Articles 18, 19 and 22, companies may participate in industry and multi-stakeholder initiatives to support the implementation of aspects of their due diligence obligations referred to in Articles 5 to 11 of this Directive to the extent that such initiatives are appropriate to support the fulfilment of the relevant obligations. They may be particularly appropriate to support sector-wide risk identification, providing tools for mitigation of specific risks, coordinating the use of companies’ leverage to enable remediation, and providing access to a grievance mechanism. The Commission, in collaboration with Member States, the OECD, the OHCHR and relevant stakeholders, shall:

AddedArticle 14 – paragraph 4 – point a (new): (a) issue guidance and a methodology for assessing the scope, alignment with this Directive, and credibility including with regard to transparency, governance, oversight mechanisms and accountability of participating companies, of individual industry and multi-stakeholder initiatives, building on the OECD’s alignment assessment methodology;

AddedArticle 14 – paragraph 4 – point b (new): (b) establish a centralised and public digital platform for companies, governments and other stakeholders to access free of charge independent third-party assessments of the scope, alignment, and credibility of individual industry and multi-stakeholder initiatives using the methodology developed by the Commission under point (a). Independent third-party assessments may be carried out by Member States, the OECD or other independent third party assessors;

AddedArticle 14 – paragraph 4 – point c (new): (c) facilitate the dissemination of other relevant information on the scope, alignment and credibility of industry and multi-stakeholder initiatives and their outcomes. Member States shall foster the development of appropriate industry or multi-stakeholder initiatives to support companies in particular sectors or on particular issues that involve severe sustainability risks but lack such initiatives.

AddedArticle 14 – paragraph 4 a (new): 4a. Without prejudice to Articles 18, 19 and 22, companies may use independent third party verification to support the implementation of aspects of their due diligence obligations referred to in Articles 5 to 11 of this Directive to the extent that such verification is appropriate to support the fulfilment of the relevant obligations. The Commission shall adopt a delegated act in accordance with Article 28 to specify the minimum standards, including transparency standards, for the independent third-party verification.

AddedArticle 14 – paragraph 4 b (new): 4b. Relevant stakeholders may submit notifications and grievances pursuant to Article 9 through industry and multi-stakeholder initiatives that the company participates in.

AddedArticle 14 a (new): Article 14a / Single helpdesk / 1. Each Member State shall designate one or more national helpdesks on corporate sustainability due diligence. Member States may assign this role to an existing authority such as National Contact Points where they exist but shall ensure that the single helpdesks are functionally independent from the tasks and role of the supervisory authorities. / 2. Companies may seek additional guidance and obtain further support and information about how best to fulfil their due diligence obligations through this point of contact, including on the role of collaborative industry and multi-stakeholder initiatives in supporting and assisting companies to meet specific aspects of their due diligence obligations. / 3. The single helpdesks may also liaise with each other to ensure cross-border cooperation, and, where relevant, Member States shall ensure that single helpdesks coordinate with other implementation bodies or other relevant international instruments, such as OECD National Contact Points.

AddedArticle 15 – paragraph 1: 1. Member States shall ensure that companies referred to in Article 2 develop and implement a transition plan in line with the reporting requirements in Article 19a of Regulation (EU) 2021/0104 (CSRD), to ensure that the business model and strategy of the company are aligned with the objectives of the transition to a sustainable economy and with the limiting of global warming to 1.5°C in line with the Paris Agreement and the objective of achieving climate neutrality as established in Regulation (EU) 2021/1119 (European Climate Law) as regards its operations in the Union, including its 2050 climate neutrality target and the 2030 climate target. This plan shall include a description of:

AddedArticle 15 – paragraph 1 – point a (new): (a) the resilience of the company’s business model and strategy to risks related to climate matters;

AddedArticle 15 – paragraph 1 – point b (new): (b) the opportunities for the company related to climate matters;

AddedArticle 15 – paragraph 1 – point c (new): (c) where appropriate an identification and explanation of decarbonisation levers within the company’s operations and value chain, including the exposure of the company to coal-, oil- and gas-related activities, as referred to in Articles 19a(2), point (a)(iii), and 29a(2), point (a)(iii), of Directive 2013/34/EU;

AddedArticle 15 – paragraph 1 – point d (new): (d) how the company’s business model and strategy take account of the interests of the company’s affected stakeholders and of the impacts of the company on climate change;

AddedArticle 15 – paragraph 1 – point e (new): (e) how the company’s strategy has been implemented and will be implemented with regard to climate matters, including related financial and investment plans;

AddedArticle 15 – paragraph 1 – point f (new): (f) the time-bound targets related to climate change set by the company for scope 1, 2 and, where relevant, 3 emissions, including where appropriate, absolute emission reduction targets for greenhouse gas for 2030 and in five-year steps up to 2050 based on conclusive scientific evidence, and a description of the progress the company has made towards achieving those targets;

AddedArticle 15 – paragraph 1 – point g (new): (g) a description of the role of the administrative, management and supervisory bodies with regard to climate matters.

AddedArticle 15 – paragraph 2: deleted

AddedArticle 15 – paragraph 3: 3. Member States shall ensure that directors are responsible for overseeing the obligations set out in this Article and that companies with more than 1000 employees on average have a relevant and effective policy in place to ensure that part of any variable remuneration for directors is linked to the company’s transition plan referred to in this Article. Such a policy shall be approved by the Annual General Meeting.

AddedArticle 17 – paragraph 1: 1. Each Member State shall designate one or more supervisory authorities to supervise compliance with the obligations laid down in national provisions adopted pursuant to this Directive (‘supervisory authority’).

AddedArticle 17 – paragraph 6: 6. By the date indicated in Article 30(1), point (a), Member States shall inform the Commission of the names and contact details of the supervisory authorities and, where applicable, the respective competences of those authorities, designated pursuant to this Article, as well as of their respective competence where there are several designated supervisory authorities. They shall inform the Commission of any changes thereto.

RemovedArticle 18 – paragraph 3: 3. Inspections shall be conducted in compliance with the national law of the Member State in which the inspection is carried out and without prior warning to the company, except where prior notification is necessary in order to ensure the effectiveness of the inspection. Where, as part of its investigation, a supervisory authority wishes to carry out an inspection on the territory of a Member State other than its own, it shall seek assistance from the supervisory authority in that Member State pursuant to Article 21(2).

AddedArticle 18 – paragraph 4 – subparagraph 2: Taking remedial action does not preclude the imposition of administrative sanctions or the triggering of civil liability in case of damages, including in accordance with Articles 20 and 22, respectively.

RemovedArticle 18 – paragraph 4 – subparagraph 2: Taking remedial action does not preclude the imposition of administrative sanctions or the triggering of civil liability, including in case of damages in accordance with Articles 20 and 22, respectively.

AddedArticle 18 – paragraph 5 – point b: (b) to impose sanctions in accordance with Article 20;

RemovedArticle 20 – paragraph 4: 4. Member States shall ensure that any decision of the supervisory authorities containing sanctions related to the breach of the provisions of this directive is published no later than a month after the sanction is imposed.

AddedArticle 20 – paragraph 2 – point c (new): (c) any collaboration with other entities to address adverse impacts in its value chains;

RemovedArticle 21 – paragraph 1 – subparagraph 2: The Commission shall invite the European Agency for Fundamental Rights, the European Environment Agency, the European Labour Authority and the European Securities and Markets Authority and other Union agencies with relevant expertise in the areas covered by this Directive to join the European Network of Supervisory Authorities.

AddedArticle 20 – paragraph 2 – point d (new): (d) the seriousness and duration of the company’s infringement, or the severity of the impacts that have occurred;

RemovedArticle 21 – paragraph 8 a (new): 8a. The Commission shall regularly communicate on the activities of the network.

AddedArticle 20 – paragraph 2 – point e (new): (e) the extent to which prioritisation decisions were reasonable, credible and taken in good faith;

RemovedArticle 22 – paragraph 1 – point a: (a) they or a company under their control failed to comply with the obligations laid down in this Directive and;

AddedArticle 20 – paragraph 2 – point f (new): (f) any previous infringements by the company of national provisions adopted pursuant to this Directive;

RemovedArticle 22 – paragraph 1 – point b: (b) as a result of this failure the company or a company under their control caused or contributed to an adverse impact that should have been identified, prevented, mitigated, brought to an end, remedied or its extent minimised through the appropriate measures laid down in this Directive and led to damage.

AddedArticle 20 – paragraph 2 – point g (new): (g) the financial benefits gained or losses avoided by the company due to the infringement, if the relevant data are available;

RemovedArticle 22 – paragraph 2 – subparagraph 1: Where there is a claim for damages in accordance with paragraph 1 and the claimant provides prima facie elements substantiating the likelihood of the defendant’s liability, Member States shall ensure that where a company can demonstrate that it complied with its obligations under this Directive, it shall not be liable, unless it was unreasonable, in the circumstances of the case, to expect that the action actually taken, including as regards verifying compliance, would be an appropriate measure to prevent, mitigate, bring to an end or minimise the extent of the adverse impact.

AddedArticle 20 – paragraph 2 – point h (new): (h) penalties imposed in respect of similar infringements in other Member States;

RemovedArticle 22 – paragraph 2 – subparagraph 2: In the assessment of the existence and extent of liability, due account shall be taken of the company’s efforts, insofar as they relate directly to the damage in question, to take remedial action, including that required of them by a supervisory authority, any investments made and any targeted support provided pursuant to Articles 7 and 8, as well as any collaboration with other entities and affected stakeholders to address adverse impacts in its value chains.

AddedArticle 20 – paragraph 2 – point i (new): (i) whether the company has effectively dealt with complaints or proposals raised by persons or affected stakeholders, including pursuant to Article 9;

RemovedArticle 22 – paragraph 2 a (new): 2a. Member States shall ensure that: / (a) the limitation period for bringing actions for damages is at least ten years, and that such period is to be interrupted or suspended, depending on national law, if the supervisory authority is taking action under Article 18; / (b) claimants are able to seek injunctive measures before Union courts, including summary proceedings. These shall be in the form of a definitive or provisional measure to cease an action which may be in breach of this Directive, or to comply with a measure in this Directive; / (c) measures are in place to ensure that costs of the proceedings are not prohibitively expensive for claimants to seek justice, which may include structural support, legal aid and limitation of court and administrative fees; / (d) measures are in place to ensure that trade unions and civil society organisations acting in the public interest can jointly bring actions for the protection of a group of victims; / (e) when a claim is brought, that a claimant provides elements substantiating the likelihood of a company’s liability under this Directive and has indicated that additional evidence lies in the control of the company, courts are able to order that such evidence be disclosed by the company in accordance with national procedural law, subject to the Union and national rules on confidentiality and proportionality.

AddedArticle 20 – paragraph 2 – point j (new): (j) any other aggravating or mitigating factors applicable to the circumstances of the case.

RemovedArticle 22 – paragraph 4: 4. The civil liability rules under this Directive shall be without prejudice to Union or national rules on civil liability, including rules on joint and several liability, related to adverse human rights impacts or to adverse environmental impacts that provide for liability in situations not covered by or providing for stricter liability than this Directive.

AddedArticle 20 – paragraph 2 a (new): 2a. At least the following measures and sanctions shall be provided for: / (a) pecuniary sanctions; / (b) a public statement indicating that a company is responsible and the nature of the infringement; / (c) the obligation to perform an action, including to cease the conduct constituting the infringement and to desist from any repetition of that conduct; / (d) the suspension of products from free circulation or export.

RemovedArticle 24 – paragraph 1: Member States shall ensure that companies applying for public support certify that no sanctions have been imposed on them for a failure to comply with the obligations of this Directive in the 3 years prior to the application.

AddedArticle 20 – paragraph 3: 3. When pecuniary sanctions are imposed, they shall be based on the company’s net worldwide turnover. The maximum limit of pecuniary sanctions shall be not less than 5% of the net worldwide turnover of the company in the business year preceding the fining decision.

RemovedArticle 24 – paragraph 1 a (new): In accordance with Article 18(2) of Directive 2014/24/EU of the European Parliament and of the Council129d, Article 36(2) of Directive 2014/25/EU of the European Parliament and of the Council129e and Article 30(3) of Directive 2014/23/EU of the European Parliament and of the Council129f, Member States shall take appropriate measures to ensure that in the performance of public procurement or concession contracts companies comply with the obligations laid down in national provisions adopted pursuant to Articles 4 to 11a of this Directive. / 129d Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC (OJ L 94, 28.3.2014, p. 65). / 129e Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC (OJ L 94, 28.3.2014, p. 243). / 129f Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts (OJ L 94, 28.3.2014, p. 1).

AddedArticle 20 – paragraph 3 – subparagraph 1 a (new): Member States shall ensure that, with regards to companies referred to in Article 2(1), point (b) and Article 2(2), point (b), administrative pecuniary sanctions are calculated taking into account the consolidated turnover reported by that company.

RemovedArticle 25 – paragraph 1: 1. Member States shall ensure that, when fulfilling their duty to act in the best interest of the company, directors of companies referred to in Article 2(1) evaluate and address the consequences of their decisions for sustainability matters, including human rights, climate change, environmental and good governance actual or potential adverse impacts in the short, medium and long term.

AddedArticle 20 – paragraph 3 a (new): 3a. Member States shall lay down rules so that companies which are formed in accordance with the legislation of a third country under Article 2(2) shall be excluded from public procurement processes if they fail to appoint an authorised representative under Article 16.

RemovedArticle 26 – title: Setting up, overseeing and incentivising due diligence and plans to combat climate change

AddedArticle 20 – paragraph 4: 4. Member States shall keep a record of sanctions that have been imposed and ensure that any decision of the supervisory authorities containing sanctions related to the breach of the provisions of this directive is published. The published decision shall not contain any personal data within the meaning of Article 4(1) of Regulation (EU) 2016/679.

RemovedArticle 26 – paragraph 1: 1. Member States shall ensure that directors of companies referred to in Article 2(1) are responsible for putting in place and overseeing the due diligence actions referred to in Article 4, and for ensuring that the overall business model and strategy of the company is aligned to the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement as provided for in Article 15, with due consideration for relevant input from stakeholders, including civil society organisations and trade unions and workers’ representatives. The directors shall regularly report to the board of directors in that respect.

AddedArticle 21 – paragraph 1 – subparagraph 1: The Commission shall set up a European Network of Supervisory Authorities, composed of representatives of the supervisory authorities. The Network shall facilitate the cooperation of the supervisory authorities and the coordination and alignment of regulatory, investigative, sanctioning and supervisory practices of the supervisory authorities and, as appropriate, sharing of information among them, as well as ensuring regular public communication on the activities of the Network.

RemovedArticle 26 – paragraph 2: 2. Member States shall ensure that directors adapt the business model and strategy to address sustainability risks and the actual and potential adverse impacts identified pursuant to Article 6 and any measures taken pursuant to Articles 7 to 9 and the plan to combat climate change adopted pursuant to Article 15.

AddedArticle 21 – paragraph 1 – subparagraph 2: The Commission shall invite the European Agency for Fundamental Rights, the European Environment Agency, the European Labour Authority, the European Innovation Council and SMEs Executive Agency, and the European Securities and Markets Authority and other Union agencies with relevant expertise in the areas covered by this Directive to join the European Network of Supervisory Authorities.

AddedArticle 22 – paragraph 2 a (new): 2a. Member States shall ensure that: / (a) the limitation period for bringing actions for damages is at least ten years and measures are in place to ensure that costs of the proceedings are not prohibitively expensive for claimants to seek justice; / (b) claimants are able to seek injunctive measures, including summary proceedings. These shall be in the form of a definitive or provisional measure to cease an action which may be in breach of this Directive, or to comply with a measure under this Directive; / (c) measures are in place to ensure that mandated trade unions, civil society organisations, or other relevant actors acting in the public interest can bring actions before a court on behalf of a victim or a group of victims of adverse impacts, and that these entities have the rights and obligations of a claimant party in the proceedings, without prejudice to existing national law; / (d) when a claim is brought, that a claimant provides elements substantiating the likelihood of a company’s liability under this Directive and has indicated that additional evidence lies in the control of the company, courts are able to order that such evidence be disclosed by the company in accordance with national procedural law, subject to the Union and national rules on confidentiality and proportionality.

AddedArticle 22 – paragraph 2 b (new): 2b. Companies that have participated in industry or multi-stakeholder initiatives, multi-stakeholders initiatives, or used third-party verification or contractual clauses to support the implementation of specific aspects of their due diligence obligations can still be held liable in accordance with this Article.

AddedArticle 22 – paragraph 3: 3. The civil liability of a company for damages arising under this provision shall be without prejudice to the civil liability of its subsidiaries or of any direct and indirect business partners in the value chain. In such instances as where a subsidiary is under the scope of this Directive and has been dissolved by the parent company or has dissolved itself intentionally in order to avoid liability, the liability can be imputed to the parent company in case there is no legal successor.

AddedArticle 22 – paragraph 4: 4. The civil liability rules under this Directive shall not limit companies' liability under Union or national legal systems, including rules on joint and several liability.

AddedArticle 24 – title: Public support, public procurement and public concessions

AddedArticle 24 – paragraph 1: Member States shall ensure that (non-)compliance with the obligations resulting from this Directive or their voluntary implementation qualifies as one of the environmental and social aspects to be taken into consideration in accordance with the rules applicable to the provision of public support or the award of public contracts and concessions.

AddedArticle 28 – paragraph 2: 2. The power to adopt delegated acts referred to in Article 3(2), Article 11 and Article 14(4a) shall be conferred on the Commission for a period of 5 years from … [date of entry into force of this Directive]. The Commission shall draw up a report in respect of the delegation of power no later than nine months before the end of the 5-year period. The delegation of power shall be tacitly extended for periods of an identical duration, unless the European Parliament or the Council opposes such an extension no later than three months before the end of each period.

AddedArticle 28 – paragraph 3: 3. The delegation of power referred to in Article 3(2), and Article 11 or Article 14(4a) may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.

AddedArticle 28 – paragraph 6: 6. A delegated act adopted pursuant to Article 3(2), Article 11 or Article 14(4a) shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or of the Council.

AddedArticle 29 – title: Review and reporting

AddedArticle 29 – paragraph 1 – introductory part: 1. No later than … [OP please insert the date = 6 years after the date of entry into force of this Directive], and every 3 years thereafter, the Commission shall submit a comprehensive report to the European Parliament and to the Council on the implementation of this Directive. The report shall evaluate the effectiveness of this Directive in reaching its objectives, in particular regarding its effectiveness in preventing potential adverse impacts, bringing actual adverse impacts to an end or minimising their extent globally, derive recommendations for actions and shall be accompanied, if appropriate, by a legislative proposal. The report shall assess in particular the following issues:

AddedArticle 29 – paragraph 1 – point -a (new): (-a) the impact of this Directive on SMEs, accompanied by an account and assessment of the effectiveness of the different measures and tools for support provided to SMEs by the Commission and the Member States;

AddedArticle 29 – paragraph 1 – point -a a (new): (-aa) an assessment of the number of small and medium-sized undertakings voluntarily applying corporate sustainability and due diligence in line with this Directive;

AddedArticle 29 – paragraph 1 – point -a b (new): (-ab) the effectiveness of this Directive in achieving its objectives, including the associated indirect costs and the economic, social and environmental benefits thereof as well as the effects on the competitiveness of European Union companies;

AddedArticle 29 – paragraph 1 – point a: (a) whether the thresholds regarding the number of employees and net turnover laid down in Article 2 need to be lowered, in particular for certain sectors, whether the modalities for calculating thresholds are appropriate and whether significant loopholes need to be closed for the Directive to apply to all relevant legal forms of economic operators and complex corporate structures;

AddedArticle 29 – paragraph 1 – point a a (new): (aa) the effectiveness of the enforcement mechanisms put in place at national level and of the sanctions and procedures for civil liability in particular;

AddedArticle 29 – paragraph 1 – point a b (new): (ab) the convergence and divergence between national laws of the Member States transposing this Directive;

AddedArticle 29 – paragraph 1 – point b: deleted

AddedArticle 29 – paragraph 1 – point c: deleted

AddedArticle 29 – paragraph 1 – point d: (d) whether Articles 4 to 14 should be extended to additional adverse impacts, in particular to also encompass adverse impacts on good governance.

AddedArticle 29 – paragraph 1 – point d a (new): (da) whether a broad sustainability plan, dealing with other environmental impacts than climate, shall be developed;

AddedArticle 29 – paragraph 1 – point d b (new): (db) whether the definition of "value chain" as regards regulated financial undertakings should be extended to a wider range of companies;

AddedArticle 29 – paragraph 1 a (new): 1a. The Commission shall initiate and coordinate an annual Union-wide assessment of the resilience of companies to adverse scenarios related to their value chains. The Commission shall provide this assessment to the European Parliament and the Council.

AddedArticle 30 – paragraph 1 – subparagraph 2 – introductory part: They shall apply those provisions from… [OJ to insert: 3 years from the entry into force of this Directive] as regards companies referred to in Article 2(1) which had more than 1000 employees on average and had a net worldwide turnover of more than EUR 150 million in the last financial year, or were the ultimate parent company of a group with such a number of employees and generating such a turnover, and Article 2(2) which generated a net turnover of more than EUR 150 million in the Union in the financial year preceding the last financial year, or were the ultimate parent company of a group generating such a turnover. / They shall apply those provisions from… [OJ to insert: 4 years from the entry into force of this Directive] as regards companies referred to in Article 2(1), which had more than 500 employees on average and had a net worldwide turnover of more than EUR 150 million in the last financial year, or were the ultimate parent company of a group with such a number of employees and generating such a turnover. / They shall apply those provisions from… [OJ to insert: 4 years from entry into force of this Directive] as regards companies referred to in Article 2(1) point (a), which had more than 250 employees on average and had a net worldwide turnover of more than EUR 40 million, and Article 2(2) which generated a net turnover of more than EUR 40 million in the Union and EUR 150 million worldwide in the financial year preceding the last financial year or were the ultimate…

AddedArticle 30 – paragraph 1 – subparagraph 2 – point a: deleted

AddedArticle 30 – paragraph 1 – subparagraph 2 – point b: deleted

AddedAnnex I – Part I – subheading 1 – title: 1. Rights and prohibitions included in international human rights agreements

AddedAnnex I – Part I – subheading 1 – point 1: 1. The people's right to dispose of a land's natural resources and to not be deprived of means of subsistence in accordance with Article 1 of the International Covenant on Civil and Political Rights;

RemovedAnnex I – Part I – subheading 2 – indent 23 f (new): - The European Social Charter

AddedAnnex I – Part II – point 2: 2. The prohibition to import or export any specimen included in an Appendix of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) of 3 March 1973 without a permit, pursuant to Articles III, IV and V;

RemovedAnnex I – Part I – subheading 2 – indent 23 g (new): - United Nations Protocol against the Smuggling of Migrants by Land, Sea and Air supplementing the United Nations Convention against Transnational Organized Crime

AddedAnnex I – Part II – point 3: 3. The prohibition of the manufacture of mercury-added products pursuant to Article 4 (1) and Annex A Part I of the Minamata Convention on Mercury of 10 October 2013 (Minamata Convention);

RemovedAnnex I – Part I – subheading 2 – indent 23 h (new): - The European Convention on The Legal Status of Migrant Workers

AddedAnnex I – Part II – point 4: 4. The prohibition of the use of mercury and mercury compounds in manufacturing processes within the meaning of Article 5 (2) and Annex B Part I of the Minamata Convention from the phase-out date specified in the Convention for the respective products and processes;

RemovedAnnex I – Part I - subheading 2 – indent 23 i (new): - Council of Europe Convention on preventing and combating violence against women and domestic violence

AddedAnnex I – Part II – point 5: 5. The prohibition of the treatment of mercury waste contrary to the provisions of Article 11 (3) of the Minamata Convention;

RemovedAnnex I – Part II – subheading 1: violations of Union and internationally recognized objectives and prohibitions included in environmental conventions and Union legislation

AddedAnnex I – Part II – point 6: 6. The prohibition of the production and use of chemicals pursuant to Article 3 (1) (a) (i) and Annex A of the Stockholm Convention of 22 May 2001 on Persistent Organic Pollutants (POPs Convention), in the version of Regulation (EU) 2019/1021 of the European Parliament and of the Council of 20 June 2019 on persistent organic pollutants (OJ L 169 of 25 June 2019 pp. 45-77;

RemovedAnnex I – Part II – point 12 a (new): 12a. Violation of the greenhouse gas emissions reduction objectives of the Paris Agreement under the United Nations Framework on Climate Changes, the European Climate Law, and the Global Methane Pledge.

AddedAnnex I – Part II – point 7: 7. The prohibition of the handling, collection, storage and disposal of waste in a manner that is not environmentally sound in accordance with the regulations in force in the applicable jurisdiction under the provisions of Article 6 (1) (d) (i) and (ii) of the POPs Convention;

RemovedAnnex I – Part II a (new): IIa Violations of internationally recognized objectives and prohibitions included in good governance and anti-corruption conventions / 1. United Nations Convention Against Corruption, 2003 / 2. United Nations Basic Principles on the Independence of the Judiciary, 1985 / 3. United Nations Declaration of Basic Principles of Justice for Victims of Crime and Abuse of Power, 1985 / 4. Council of Europe Civil Law on Corruption, 1999 / 5. OECD Anti-Bribery Convention, 1997 / 6. European Union Convention against Corruption Involving Officials (EU Convention against Corruption) / 7. Principle Ten on Anti-Corruption of the UN Global Compact

AddedAnnex I – Part II – point 8: deleted

AddedAnnex I – Part II – point 9: 9. The prohibition of the production and consumption of specific substances that deplete the ozone layer (i.e., CFCs, Halons, CTC, TCA, BCM, MB, HBFCs and HCFCs) after their phase-out pursuant to the Vienna Convention for the protection of the Ozone Layer and its Montreal Protocol on substances that deplete the Ozone Layer;

AddedAnnex I – Part II – point 10 – introductory part: 10. The prohibition of exports of hazardous waste within the meaning of Article 1 (1) and other wastes within the meaning of Article 1 (2) of the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal of 22 March 1989 (Basel Convention) and within the meaning of Regulation (EC) No 1013/2006 of the European Parliament and of the Council of 14 June 2006 on shipments of waste (OJ L 190 of 12 July 2006 pp. 1-98) (Regulation (EC) No 1013/2006), as last amended by Commission Delegated Regulation (EU) 2020/2174 of 19 October 2020 (OJ L 433 of 22 December 2020 pp. 11-19)

AddedAnnex I – Part II – point 12 a (new): 12a. The obligation to achieve reductions in greenhouse gas emissions interpreted in line with Article 2 (1)(a), Article 4 (1), Article 4 (2), and Article 5 (1) of the Paris Agreement under the United Nations Framework on Climate Change, the European Climate Law, and the Global Methane Pledge.

AddedAnnex I – Part II – point 12 b (new): 12b. The obligation to take all measures consistent with the UN Convention on the Laws of the Sea (UNCLOS) that are necessary to prevent, reduce and control pollution of the marine environment from any source, using for this purpose the best practicable means at their disposal and in accordance with their capabilities, in line with Article 194(1) of UNCLOS, including Article 194 (3)(a), Article 194 (3)(b), Article 194 (3)(c), and Article 194 (3)(d) of UNCLOS.

AddedAnnex I – Part II – point 12 c (new): 12c. The rights of access to information, public participation in decision making and access to justice in environmental matters in accordance with, in particular, Articles 4, 6, and 9 of the Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters (Aarhus Convention)

AddedAnnex I – Part II – point 12 d (new): 12d. The obligation to ensure that persons, groups and organizations that promote and defend human rights in environmental matters relating to a company’s value chain are able to act free from threat, restriction and insecurity and are not penalized, persecuted or harassed in any way for their involvement, in accordance with Article 3 (8) of the Aarhus Convention.

AddedAnnex I – Part II – point 12 e (new): 12e. The obligation to take all appropriate measures to prevent, control and reduce any transboundary impact on transboundary waters in line with the 1992 Convention on the Protection and Use of Transboundary Watercourses and International Lakes.

AddedSHORT JUSTIFICATION

AddedThe European Commission published a Proposal for a Directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937 on 23 February 2022. The proposal puts forward and details mandatory due diligence processes for companies to fulfil their responsibilities and to be held liable for failures to do so.

AddedThe DROI rapporteur welcomes the Commission’s proposal and considers it likely to contribute to fostering positive behavioural change by companies towards identification, prevention and mitigation of harmful impacts of their operations and relationships in their global value chains.

AddedWith this legislative proposal, the EU has an opportunity to assert itself as a global normative power by showing leadership in addressing the serious sustainable development challenge faced by societies collectively and globally. This Directive presents an unparalleled occasion for the EU to integrate human and environmental sustainability into business and corporate practices and to drive change on the global level.

AddedHowever, in many respects the proposal fails to adopt a human-rights centred approach and to implement the widely accepted international standards. It does not fully meet its stated objectives and falls short in living up to due diligence best practices, already implemented by many EU companies on a voluntary basis.

AddedIn order to scale up the quality and efficiency of due diligence processes and to enhance accountability of companies along their value chains, the rapporteur identifies several aspects where clarification and improvements are to be envisaged. These improvements aim at making the legislation more effective and workable for companies, affected stakeholders and victims.

AddedTo this end, the following elements could be added or strengthened:

Added- ensuring that companies carry out due diligence efforts throughout their entire value chains, based on the risk of adverse impacts determined by their sector of activity and the context of their operations;

Added- requiring companies to tackle risks and adverse impacts on good governance, given the proven and internationally recognised interrelationship between good governance and the enjoyment of Human Rights;

Added- requiring companies to meaningfully engage with stakeholders with the aim of informing and improving their corporate decisions and due diligence practices, as well as to ensure protection and safety of all stakeholders from retaliation and reprisal for their participation;

Added- requiring companies to provide for effective remediation of harm caused by or connected to their operations and value chains;

Added- ensuring liability of companies and guaranteeing access to justice and legal remedies for victims of harm linked to violations of due diligence obligations.

AddedAMENDMENTS

AddedThe Committee on Foreign Affairs calls on the Committee on Legal Affairs, as the committee responsible, to take into account the following amendments:

AddedRecital 1: (1) The Union is founded on the respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights as enshrined in the EU Treaties and the EU Charter of Fundamental Rights. Those core values that have inspired the Union’s own creation, as well as the universality and indivisibility of human rights, and respect for the principles of the United Nations Charter and international law, should guide the Union’s action on the international scene. Such action includes fostering the sustainable economic, social and environmental development of developing countries.

AddedRecital 5: (5) Existing international standards on responsible business conduct specify that companies have a responsibility to respect and should protect human rights and set out how they should address the protection of the environment across their operations and value chains. The United Nations Guiding Principles on Business and Human Rights79 recognise the responsibility of companies to exercise human rights due diligence by identifying, preventing and mitigating the adverse impacts of their operations on human rights and by accounting for how they address those impacts. Those Guiding Principles state that businesses should avoid infringing human rights and should address adverse human rights impacts that they have caused, contributed to or are linked with in their own operations, subsidiaries and through their direct and indirect business relationships. Those Guiding Principles state that businesses should have in place processes to enable the remediation of any adverse human right impacts they cause or to which they contribute. Those Guiding Principles further recognise, as part of their duty to protect against business-related human rights abuses, that States should take appropriate steps to ensure, through judicial, administrative and legislative means, that those affected have access to an effective remedy.

AddedRecital 6: (6) The concept of human rights due diligence was specified and further developed in the OECD Guidelines for Multinational Enterprises80 which extended the application of due diligence to environmental and governance topics. The OECD Guidance on Responsible Business Conduct and sectoral guidance81 are internationally recognised frameworks setting out practical due diligence steps to help companies identify, prevent, mitigate and account for how they address actual and potential impacts in their operations, value chains and other business relationships. The OECD Guidelines also set out the requirement for companies to engage with relevant stakeholders in order to provide meaningful opportunities for their views to be taken into account in relation to planning and decision making for projects or other activities that may significantly impact local communities. The concept of due diligence is also embedded in the recommendations of the International Labour Organisation (ILO) Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy.82

AddedRecital 12: (12) This Directive is in coherence with the EU Action Plan on Human Rights and Democracy 2020-202499 . This Action Plan defines as a priority to strengthen the Union’s engagement to actively promote the global implementation of the United Nations Guiding Principles on Business and Human Rights and other relevant international guidelines such as the OECD Guidelines for Multinational Enterprises, including by advancing relevant due diligence standards. The Action Plan also emphasises the importance of the fight against corruption along the lines of the UN Convention against Corruption, recognising that corruption facilitates, perpetuates and institutionalises human rights violations and hinders the observance and implementation of human rights. / 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).

AddedRecital 14: (14) This Directive aims to ensure that companies active in the internal market respect human rights and contribute to sustainable development and the sustainability transition of economies and societies through the identification, prevention and mitigation of potential and actual adverse impacts on human rights, the environment and good governance and through bringing to an end, providing for effective legal remediation and ensuring access to justice for victims of actual adverse impacts on human rights, the environment and good governance connected with companies’ own operations, subsidiaries and value chains.

AddedRecital 15: (15) Companies should take appropriate steps to set up and carry out due diligence measures, with respect to their own operations, their subsidiaries, as well as their business relationships throughout their value chains in accordance with the provisions of this Directive. This Directive should not require companies to guarantee, in all circumstances, that adverse impacts will never occur or that they will be stopped. For example with respect to business relationships where the adverse impact results from State intervention, the company might not be in a position to arrive at such results. In such a situation, the company should foresee following its assessment to terminate the business relationship with respect of the activities concerned. Therefore, the main obligations in this Directive should be ‘obligations of means’. The company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. Account should be taken of the specificities of the company’s value chain, sector or geographical area in which its value chain partners operate, the company’s power to influence its direct and indirect business relationships, and whether the company could increase its power of influence.

AddedRecital 15 a (new): (15a) Companies should adapt the due diligence measures to the context, environment and political and social circumstances of their own operations, their subsidiaries, as well as their business relationships throughout their value chains. In conflict-affected and high-risk areas, companies face an increased risk of being involved in serious human rights abuses In these areas, Member States and companies should respect their obligations under International Humanitarian Law (IHL) when applicable, and should undertake heightened due diligence following the guidance on heightened human rights due diligence for business in conflict-affected contexts developed by the UNDP and other relevant international bodies. This includes complementing standard due diligence with a conflict analysis, based on stakeholders engagement, aimed at understanding the root causes, triggers and parties driving the conflict and the impact of the company’s business activities on the conflict.

AddedRecital 16: (16) The due diligence process set out in this Directive should cover the six steps defined by the OECD Due Diligence Guidance for Responsible Business Conduct, which include due diligence measures for companies to identify and address adverse impacts on human rights, the environment and good governance. This encompasses the following steps: (1) integrating due diligence into policies and management systems, (2) identifying and assessing adverse impacts on human rights, the environment and good governance, (3) preventing, ceasing or minimising actual and potential adverse impacts on human rights, the environment and good governance, (4) assessing the effectiveness of measures, (5) communicating, (6) providing remediation. The OECD Due Diligence Guidance for Responsible Business Conduct also includes detailed recommendations to ensure meaningful stakeholder involvement and access to justice, including guidance to remove barriers to engagement with vulnerable stakeholder groups.

AddedRecital 16 a (new): (16a) For each of the six steps and throughout the entire due diligence process, companies should carry out meaningful stakeholders engagement. As set out in the OECD Guidelines for Multinational Enterprises, effective stakeholder engagement involves interactive processes, is characterised by two-way communication and depends on the good faith of the participants on both sides. For the purpose of this Directive, stakeholders engagement processes should guarantee the safety and protection of the physical and legal integrity of stakeholders. Companies should address risks of retaliation and reprisal faced by stakeholders due to their participation. Companies should pay special attention to overlapping vulnerabilities and intersecting factors in stakeholder engagement. Vulnerable stakeholders groups suffer from differentiated and often disproportionate adverse impacts and often face discrimination and additional barriers to participation and access to justice. Companies should provide meaningful information to stakeholders about actual and potential adverse impacts on human rights, the environment and good governance of particular operations, projects and investments, in a timely and accessible manner, taking into account specifics of the stakeholder’s group. Companies must respect the rights of indigenous peoples, as laid out in the United Nations Declaration on the Rights of Indigenous Peoples, including as regards their free, prior and informed consent and their right to self…

AddedRecital 17: (17) Adverse impacts on human rights, the environment and good governance, occur in companies’ own operations, subsidiaries, products, services, and in their value chains, in particular at the level of raw material sourcing, manufacturing, or at the level of product or waste disposal. In order for the due diligence to have a meaningful impact, it should cover adverse impacts on human rights, the environment and good governance generated throughout the life-cycle of production and use and disposal of product or provision of services, at the level of own operations, subsidiaries and in the value chains of companies within the scope.

AddedRecital 20: (20) In order to allow companies to properly identify the adverse impacts in their value chain and to make it possible for them to exercise appropriate leverage, the due diligence obligations in this Directive should cover business relationships.

AddedRecital 21: (21) Under this Directive, EU companies with more than 250 employees on average or a worldwide net turnover exceeding EUR 40 million and/or a balance sheet of more than EUR 20 million in the last financial year for which annual financial statements have been prepared should be required to comply with due diligence. As regards companies which do not fulfil those criteria, but are publicly listed on the stock exchange or had more than 50 employees on average, and had a net worldwide turnover of more than EUR 8 million and/or a balance sheet of more than EUR 4 million in the last financial year for which annual financial statements have been prepared, provided that at least 50% of its net turnover was generated in one or more high-impact sectors, due diligence should apply 2 years after the end of the transposition period of this directive, in order to provide for a longer adaptation period. Temporary agency workers, including those posted under Article 1(3), point (c), of Directive 96/71/EC, as amended by Directive 2018/957/EU of the European Parliament and of the Council103 , should be included in the calculation of the number of employees in the user company. Posted workers under Article 1(3), points (a) and (b), of Directive 96/71/EC, as amended by Directive 2018/957/EU, should only be included in the calculation of the number of employees of the sending company.

AddedRecital 22: (22) In order to reflect the priority areas of international action aimed at tackling human rights, environmental and good governance issues, the selection of high-impact sectors for the purposes of this Directive should be based on the collection of independent data on and documentation of human rights violations, good governance issues and environmental damages and could in particular be informed by existing and future sectoral OECD due diligence guidance. The following sectors should be regarded as high-impact for the purposes of this Directive: the manufacture of textiles, wearing apparel, leather and related products (including footwear and articles of fur), and the wholesale trade and retail sale of clothing, footwear and leather goods in specialised stores; agriculture, water supply, forestry, fisheries (including aquaculture), botanical and zoological gardens and nature reserves activities, the manufacture of food products, and the wholesale trade of agricultural raw materials, live animals, wood, food, and beverages; mining and quarrying, the extraction and refining, transport and handling of mineral resources regardless of where they are extracted from (including crude petroleum, natural gas, coal, lignite, metals and metal ores, as well as all other, non-metallic minerals and quarry products), the manufacture of basic metal products, other non-metallic mineral products and fabricated metal products, and the wholesale trade of mineral resources, basic and intermedia…

AddedRecital 25: (25) In order to achieve a meaningful contribution to the sustainability transition, due diligence under this Directive should be carried out with respect to adverse human rights impact on persons resulting from any action or omission which ends or reduces the ability of an individual or a group to enjoy the rights and be protected by prohibitions as enshrined in the international instruments and conventions as listed in the Annex to this Directive. In order to ensure a comprehensive coverage of human rights, a negative impact on the enjoyment of a right not specifically listed in that Annex which directly impairs a legal interest protected in those conventions should also form part of the adverse human rights impact covered by this Directive. That Annex should be reviewed on a regular basis and be consistent with the Union’s objectives on human rights. The Commission should be empowered to adopt delegated acts to amend the list in Annex. Due diligence should further encompass adverse environmental impacts resulting from the violation of one of the prohibitions and obligations pursuant to the international environmental conventions listed in the Annex to this Directive.

AddedRecital 27: (27) In order to conduct appropriate human rights, environmental and good governance due diligence with respect to their operations, their subsidiaries, and their value chains, companies covered by this Directive should integrate due diligence into corporate policies, identify, prevent and mitigate as well as bring to an end, and provide for remediation of potential and actual adverse impacts on human rights, the environment and good governance, establish and maintain a complaints mechanism monitor the effectiveness of the taken measures in accordance with the requirements that are set up in this Directive and communicate publicly on their due diligence. In order to ensure clarity for companies, in particular the steps of preventing and mitigating potential adverse impacts and of bringing to an end, or when this is not possible, minimising and providing for remediation of actual adverse impacts should be clearly distinguished in this Directive.

AddedRecital 28: (28) In order to ensure that due diligence forms part of companies’ corporate policies, and in line with the relevant international framework, companies should integrate due diligence into all their corporate policies and have in place a due diligence policy. The due diligence policy should contain a description of the company’s approach, including in the long term, to due diligence, a code of conduct describing the rules and principles to be followed by the company’s employees and subsidiaries; a description of the processes put in place to implement due diligence, including the measures taken to verify compliance with the code of conduct and to extend its application to business relationships. The code of conduct should apply in all relevant corporate functions and operations, including procurement and purchasing decisions. Companies should also assess and update their due diligence policy whenever there are reasonable grounds to believe that new risks of adverse impacts may arise, and at least annually.

AddedRecital 30: (30) Under the due diligence obligations set out by this Directive, a company should identify and assess actual or potential adverse impacts on human rights, the environment and good governance. In order to allow for a comprehensive identification of adverse impacts, such identification should be based on meaningful stakeholders engagement quantitative and qualitative indicators, a mapping of the company’s value chains, including relevant information, such as names, locations, types of products and services supplied, and concerning subsidiaries, suppliers and business partners. For instance, as regards adverse environmental impacts, the company should obtain information about baseline conditions at higher risk sites or facilities in value chains. Identification of adverse impacts should include assessing the human rights, and environmental context in a dynamic way and in regular intervals: prior to a new activity or relationship, prior to major decisions or changes in the operation; in response to or anticipation of changes in the operating environment; and periodically, at least every 12 months, throughout the life of an activity or relationship. Free, prior and informed consent of indigenous peoples should be a pre-requisite for any activity that affects their lands, territories and natural resources. When identifying adverse impacts, companies should also identify and assess the impact of a business relationship’s business model and strategies, including trading, procureme…

AddedRecital 32: (32) In line with international standards, prevention and mitigation as well as bringing to an end and remediation of adverse impacts should take into account the interests of those adversely impacted. In order to enable continuous engagement with the value chain business partner instead of termination of business relations (disengagement) and possibly exacerbating adverse impacts, this Directive should ensure that companies engage with affected stakeholders and assess potential adverse impacts of temporal suspension or termination of contracts, in order to avoid greater harm. Disengagement should be foreseen when the potential adverse impact is linked to a systemic and state organised oppression and consequently cannot be prevented by the actions of the company and when the company assesses that terminating the business relationship would not create greater adverse impact than the one it intends to prevent or mitigate.

AddedRecital 34: (34) So as to comply with the prevention and mitigation obligation under this Directive, companies should be required to take the following actions: companies should develop and implement a prevention action plan. The prevention action plan should be developed through meaningful stakeholders engagement on an ongoing basis and be accurately tailored to the context of companies operations and value chain. It should identify and assess if the company’s business model and strategies are adapted with the due diligence requirements and include a prioritisation strategy based on the severity and likelihood of the potential adverse impact in the event that the company is not in a position to prevent or mitigate all potential adverse impacts at the same time. Companies should seek to obtain contractual assurances from a direct partner with whom they have business relationship that it will ensure compliance with the code of conduct or the prevention action plan, including by seeking corresponding contractual assurances from its partners to the extent that their activities are part of the companies’ value chain. The contractual assurances should be accompanied by appropriate measures to verify compliance. To ensure comprehensive prevention of actual and potential adverse impacts, companies should also make investments which aim to prevent adverse impacts, provide targeted and proportionate support for partners, suppliers, including SMEs such as financing, for example, through direct fin…

AddedRecital 36: (36) For cases where potential adverse impacts could not be addressed by the described prevention or mitigation measures, companies should have the obligation to refrain from entering into new or extending existing relations with the partner in question and to either temporarily suspend commercial relationships with the partner in question, while pursuing prevention and mitigation efforts, if there is reasonable expectation that these efforts are to succeed in the short-term; or to terminate the business relationship with respect to the activities concerned if the potential adverse impact is linked to a systemic and state organised oppression and consequently cannot be prevented by the actions of the company and when the company assesses that it would not create greater adverse impact than the one it intends to prevent or mitigate. In order to allow companies to fulfil that obligation, Member States should provide for the availability of an option to temporarily suspend or terminate the business relationship in contracts governed by their laws. It is possible that prevention of adverse impacts at the level of indirect business relationships requires collaboration with another company, for example a company which has a direct contractual relationship with the supplier. In some instances, such collaboration could be the only realistic way of preventing adverse impacts, in particular, where the indirect business relationship is not ready to enter into a contract with the company…

AddedRecital 38: (38) Under the due diligence obligations set out by this Directive, if a company identifies actual adverse impacts on human rights, the environment or good governance, it should take appropriate measures to bring those to an end. It can be expected that a company is able to bring to an end actual adverse impacts in their own operations and in subsidiaries. However, it should be clarified that where adverse impacts cannot be brought to an end, companies should mitigate the impacts and provide for or co-operate in the remediation of the impact directly to the affected persons or communities. Mitigation of adverse impacts should require an outcome that is the closest possible to bringing the adverse impact to an end. Remediation should aim to restore the affected persons to the situation they would be in, had the adverse impact not occurred (if possible) and be proportionate to the significance and scale of the adverse impact and to the contribution of the company’s conduct to the adverse impact. To provide companies with legal clarity and certainty, this Directive should define which actions companies should be required to take for bringing actual human rights, environmental and good governance adverse impacts to an end and remediation. Remedial actions should be determined on the basis of meaningful engagement with affected stakeholders and may include restitution or rehabilitation, apologies, financial or non-financial compensation, assessing whether vulnerable stakeholders b…

AddedRecital 39: (39) So as to comply with the obligation of bringing to an end and minimising the extent of actual adverse impacts under this Directive, companies should be required to take the following actions. They should neutralise the adverse impact or minimise its extent, with an action proportionate to the significance and scale of the adverse impact and to the contribution of the company’s conduct to the adverse impact. Companies should develop and implement a corrective action plan with reasonable and clearly defined timelines for action and qualitative and quantitative indicators for measuring improvement. The corrective action plan should be developed through meaningful stakeholders engagement on an ongoing basis, with proper follow-through on the implementation of agreed commitments and be accurately tailored to the context of companies operations and value chain. It should also identify and assess if the company’s business model and strategies are adapted to the due diligence requirements. Companies should also seek to obtain contractual assurances from a direct business partner with whom they have a business relationship that they will ensure compliance with the company’s code of conduct and, as necessary, a prevention action plan, including by seeking corresponding contractual assurances from its partners, to the extent that their activities are part of the company’s value chain. The contractual assurances should be accompanied by the appropriate measures to verify compliance.…

AddedRecital 41: (41) For cases where actual adverse impacts could not be brought to an end or adequately mitigated by the described measures, companies should have the obligation to refrain from entering into new or extending existing relations with the partner in question and, to either temporarily suspend commercial relationships with the partner in question, while pursuing efforts to bring to an end or mitigate the adverse impact, or terminate the business relationship with respect to the activities concerned, if the adverse impact is linked to a systemic and state organised oppression and consequently cannot be ceased or mitigated by the actions of the company and when the company assesses that it would not create a greater adverse impact than the one it intends to cease or mitigate. In order to allow companies to fulfil that obligation, Member States should provide for the availability of an option to temporarily suspend or terminate the business relationship in contracts governed by their laws.

AddedRecital 42: (42) Companies should provide the possibility for persons and organisations to submit early warnings and complaints directly to them in case of legitimate concerns regarding actual or potential adverse impacts on human rights, the environment and good governance, with regard to their own operations, the operations of their subsidiaries, and the value chain operations carried out by entities with whom the company has a business relationship. Any stakeholders should be entitled to submit such complaints including trade unions and other workers’ representatives representing individuals working in the value chain concerned, local communities, indigenous people and civil society organisations, human rights and environmental rights defenders, direct witnesses and victims of corruption crimes perpetuated by the company or other legal or natural persons who have as a statutory purpose the defence of human rights, the environment and good governance. Companies should establish a procedure for dealing with and responding in a timely manner to those complaints and inform the complainants and relevant stakeholders, including workers, trade unions and other workers’ representatives about such processes. Recourse to the complaints and remediation mechanism should not prevent the complainant from having recourse to judicial remedies and effective access to justice. In accordance with international standards, companies should undertake appropriate follow-up action concerning the complaint, d…

AddedRecital 46: (46) In order to provide support and practical tools to companies on how they should fulfil their due diligence obligations or to Member State authorities on how to effectively enforce these obligations, and in order to ensure effective and uniform implementation across Member States, the Commission, using relevant international guidelines and standards as a reference, and in consultation with Member States and stakeholders, the European Union Agency for Fundamental Rights, the European Environment Agency, and where relevant the Executive Agency for Small and Medium-sized Enterprises, as well as where appropriate with international bodies having expertise in due diligence, should issue guidelines, including on the following matters: specific high-risk sectors; resource and information sharing among companies and legal entities impacts in compliance with competition law; specific process and resources for SMEs to support the application of due diligence; mapping of companies’ value chains, specific adverse impacts, including adverse impacts on good governance; facilitation of access to justice for victims; prevention and mitigation of retaliation risks faced by stakeholders; heightened due diligence in conflict-affected and high-risk areas; responsible disengagement; assessment and dynamic listing of contexts of systemic and state-imposed oppression; methodology and criteria for administrative sanctions; integrity and fitness of industry schemes and multi-stakeholder initiativ…

AddedRecital 47: (47) Although most SMEs are not included in the scope of this Directive, they could be impacted by its provisions as contractors or subcontractors to the companies which are in the scope. SMEs that are not in the scope but decide to voluntarily comply with due diligence obligations in line with this Directive should be incentivised to do so and rewarded for doing so. To this end, Member States are, for instance, encouraged to set up labelling systems to identify complying SMEs. In order to mitigate financial or administrative burden on SMEs, many of which are already struggling in the context of the global economic and sanitary crisis and to support them, Member States should set up and operate, either individually or jointly, dedicated websites, portals or platforms. Such support should also be made accessible, and where necessary adapted and extended to upstream economic operators in third countries. Member States should also financially support SMEs, through dedicated funding, provide technical assistance to help them comply with due diligence requirements and help them build capacity. Companies whose business partner is an SME, are also encouraged to support them to comply with due diligence measures, in case such requirements would jeopardize the viability of the SME and use fair, reasonable, non-discriminatory and proportionate requirements vis-a-vis the SMEs.

AddedRecital 55: (55) In order to ensure consistent application and enforcement of national provisions adopted pursuant to this Directive, national supervisory authorities should cooperate and coordinate their action. For that purpose a European Network of Supervisory Authorities should be set up by the Commission and the supervisory authorities should assist each other in performing their tasks and provide mutual assistance. In order to safeguard the level playing field and mitigate risks of forum-shopping arising from decentralised enforcement, the Commission should support Member States with guidelines on application and enforcement, and monitor adherence to these guidelines through the European Semester for policy coordination, and address potential shortcomings in country-specific recommendations.

AddedRecital 70: (70) The Commission should assess and report on a regular basis whether new sectors should be added to the list of high-impact sectors covered by this Directive, including in accordance with guidance from the Organisation for Economic Cooperation and Development or in light of clear evidence on labour exploitation, human rights violations or newly emerging good governance and environmental threats and whether the list of relevant international conventions and instruments referred to in this Directive should be amended, in particular in the light of international developments. The Commission should be empowered to adopt delegated acts to complement the list of high-impact sectors.

AddedArticle 2 – paragraph 1 – introductory part: 1. This Directive shall apply to all companies which are formed in accordance with the legislation of a Member State and which fulfil one of the following conditions:

AddedArticle 2 – paragraph 1 – point b – introductory part: (b) the company did not reach the thresholds under point (a) but is publicly listed on the stock exchange or had more than 50 employees on average and had a net worldwide turnover of more than EUR 8 million and/or a balance sheet of more than EUR 4 million in the last financial year for which annual financial statements have been prepared, provided that at least 50% of its net turnover was generated in one or more of the following high-impact sectors:

AddedArticle 2 – paragraph 1 – point b – point i: (i) the manufacture of textiles, wearing apparel, leather and related products (including footwear and articles of fur), and the wholesale trade and retail sale of clothing, footwear and leather goods in specialised stores;

AddedArticle 2 – paragraph 1 – point b – point ii: (ii) agriculture, water supply, forestry, fisheries (including aquaculture), botanical and zoological gardens and nature reserves activities, the manufacture of food products, and the wholesale trade of agricultural raw materials, live animals, wood, food, and beverages;

AddedArticle 2 – paragraph 1 – point b – point iii: (iii) mining and quarrying, the extraction and refining, transport and handling of mineral resources regardless from where they are extracted (including crude petroleum, natural gas, coal, lignite, metals and metal ores, as well as all other, non-metallic minerals, and quarry products), the manufacture of basic metal products, other non-metallic mineral products and fabricated metal products (except machinery and equipment), and the wholesale trade of mineral resources, basic and intermediate mineral products (including metals and metal ores, construction materials, fuels, chemicals and other intermediate products);

AddedArticle 2 – paragraph 1 – point b – point iii a (new): (iiia) manufacture of computer, electronic and optical products, manufacture of electrical equipment and manufacture of machinery and equipment;

AddedArticle 2 – paragraph 1 – point b – point iii b (new): (iiib) construction, including the construction of buildings, civil engineering and specialised construction activities;

AddedArticle 2 – paragraph 1 – point b – point iii c (new): (iiic) financial and insurance activities and real estate activities;

AddedArticle 2 – paragraph 1 – point b – point iii d (new): (iiid) electricity, gas, steam and air conditioning supply, including production, transmission, distribution and trade of these products;

AddedArticle 2 – paragraph 1 – point b – point iii e (new): (iiie) legal and accounting activities, including auditing activities;

AddedArticle 2 – paragraph 1 – point b – point iii f (new): (iiif) accommodation and food service activities and cleaning activities;

AddedArticle 2 – paragraph 1 – point b – point iii g (new): (iiig) security and investigation activities, including security systems service activities;

AddedArticle 2 – paragraph 1 – point b – point iii h (new): (iiih) employment activities;

AddedArticle 2 – paragraph 1 – point b – point iii i (new): (iii i) remediation activities and other waste management services, waste collection, treatment and disposal activities; materials recovery;

AddedArticle 2 – paragraph 1 – point b – point iii j (new): (iii j) human health and social work activities, including residential care activities;

AddedArticle 2 – paragraph 1 – point b – point iii k (new): (iii k) information service activities, including data processing, hosting and related activities; web portals.

AddedArticle 3 – paragraph 1 – point c: (c) ‘adverse human rights impact’ means any potential or actual negative impact on persons resulting from any action or omission, which ends or reduces an individual or a group’s enjoyment of the rights or protection by prohibitions enshrined in the international conventions and instruments, notably those listed in the Annex, Part I, Section 1 and enshrined in the Annex, Part I, Section 2, including the subsequent case law. That Annex shall be reviewed on a regular basis and be consistent with the Union’s objectives on human rights. The Commission is empowered to adopt delegated acts to amend the lists in Annex I, Part 1, Sections 1 and 2;

AddedArticle 3 – paragraph 1 – point c a (new): (c a) ‘adverse impact on good governance’ means any potential or actual adverse impact throughout companies’ entire value chains on the good governance of a country, region or territory, as set in international good governance and anti-corruption instruments listed in Annex I, Part 1, Section 3. That Annex shall be reviewed on a regular basis and be consistent with the Union’s objectives on good governance. The Commission is empowered to adopt delegated acts to amend the list in Annex I, Part 1, Section 3;

AddedArticle 3 – paragraph 1 – point c b (new): (c b) ‘conflict-affected and high-risk areas’ means geographic areas in a state of armed conflict, inter-state or civil wars or fragile post-conflict, areas under occupation and/or annexation, areas witnessing weak or non-existent governance and/or security, such as failed states, areas that experience widespread violence and/or severe violations of international humanitarian and/or human rights law, as well as areas where these violations are systemic and/or state-imposed;

AddedArticle 3 – paragraph 1 – point n: (n) ‘stakeholders’ means: / (i) the company’s workers and employees (including under informal arrangements) and their representatives, the workers and employees of its subsidiaries and their representatives, trade unions, local communities, indigenous people, human rights and environmental rights defenders, civil society organisations direct witnesses and victims of corruption crimes perpetrated by the company and other individuals, groups, communities or entities whose rights or interests are or could be affected by human rights, environmental, good governance adverse impacts linked to the products, services and operations of that company, its subsidiaries and its business relationships through the entire value chain; / (ii) organisations representing the individuals, groups, communities or entities included in (i) or whose statutory purpose is the defence of human rights, good governance, the environment or climate;

AddedArticle 3 – paragraph 1 – point n a (new): (na) ‘vulnerable stakeholders’ means individuals and right-holders groups that find themselves in marginalised situations and situations of vulnerability, due to specific contexts or intersecting factors, including, among others, their sex, gender, age, race, ethnicity, class, education, indigenous identity, migration status, disability, as well as social and economic status; which are the causes of differentiated and often disproportionate adverse impacts, and creates discrimination and an additional barrier to participation and access to justice;

AddedArticle 3 – paragraph 1 – point n b (new): (nb) ‘human rights defenders’ means individuals, groups and organs of society that promote, protect or strive for the realisation of universally recognised human rights and fundamental freedoms; human rights defenders seek the promotion and protection of civil and political rights as well as the promotion, protection and realisation of economic, social and cultural rights;

AddedArticle 3 – paragraph 1 – point n c (new): (nc) ‘environmental rights defenders’ means individuals and groups who, in their personal or professional capacity and in a peaceful manner, strive to protect and promote rights relating to the environment and climate, including biodiversity, water, air, land, soil, flora and fauna;

AddedArticle 3 – paragraph 1 – point n d (new): (nd) ‘meaningful stakeholders engagement’ means an interactive, responsive, ongoing process of engagement with stakeholders, characterised by two-way communication, conducted in good faith and guaranteeing proper implementation of agreed commitments and which involves the timely provision of all relevant information needed by stakeholders; adequate processes to remove barriers to participation for vulnerable stakeholders (such as language, culture, gender and power imbalances, divisions within the community), as well as adequate protection to ensure safety of stakeholders and prevent retaliation and reprisals;

AddedArticle 4 a (new): Article 4a / Heightened due diligence in conflict-affected and high-risk areas / Member States shall ensure that companies operating in conflict-affected areas and high-risk areas as defined in Article 3(cb) respect their obligations under international humanitarian law and conduct heightened, conflict-sensitive due diligence on all their operations and business relations through integrating into their due diligence, a conflict analysis, based on meaningful and conflict-sensitive stakeholders’ engagement, of the root causes, triggers and parties driving the conflict, and of the impact of the company’s activities on the conflict.

AddedArticle 5 a (new): Article 5a / Stakeholders engagement / 1. Member States shall ensure that companies effectively and meaningfully engage stakeholders, in fulfilling their obligations pursuant to Articles 4 to 11. / 2. At each phase of and throughout the entire due diligence process, companies shall be required to ensure: / (a) meaningful stakeholder engagement in an interactive, responsive, ongoing process, characterised by two-way communication, conducted in good faith, adapted to and removing barriers faced by vulnerable stakeholders; / (b) timely and comprehensive provision of all relevant information needed by stakeholders to make informed judgments, in an accessible and transparent manner, including meaningful information about operations, projects and investments and their actual and potential adverse impacts, in accordance with Article 11; / (c) adequate protection of stakeholders from the risk of retaliation, in accordance with Article 23; / (d) a gender and culturally responsive approach; / (e) proper follow-through on implementation of agreed commitments. / 3. The engagement of workers and workers’ representatives shall be without prejudice to Directives 2002/14/EC and 2009/38/EC of the European Parliament and of the Council and Council Directive 2001/86/EC.

AddedArticle 6 – title: Identifying and assessing actual and potential adverse impacts

AddedArticle 6 – paragraph 1: 1. Member States shall ensure that companies take appropriate measures to identify actual and potential adverse impacts on human rights, the environment and good governance arising from their own operations or those of their subsidiaries and entities on the value chains with which companies have a business relationships, in accordance with paragraph 2, 3 and 4.

AddedArticle 6 – paragraph 4: 4. Member States shall ensure that, for the purposes of identifying and assessing the adverse impacts referred to in paragraph 1, companies take action and decisions on the basis of: / (a) a mapping of the company’s value chain and disclosure of relevant information including names, locations, types of operations, products and services supplied, as well as other relevant information concerning subsidiaries, branches and business relationships; / (b) qualitative and quantitative indicators, including disaggregated data; / (c) independent reports and information gathered through the complaints mechanism provided for in Article 9; / (d) meaningful engagement with potentially affected stakeholders, in accordance with Article 3(nd); / (e) the context of their operations, meaning that companies operating in conflict-affected areas and high-risk areas conduct heightened, conflict-sensitive due diligence, through integrating, a conflict analysis, of the root causes, triggers and parties driving the conflict, and of the impact of the company’s activities on the conflict;

AddedArticle 6 – paragraph 4 a (new): 4a. Member States shall ensure that appropriate resources are made available to companies for the purposes of identifying the adverse impacts referred to in paragraph 1 and may work with the Commission to prepare appropriate resources. Supervisory authorities as defined in Article 17 shall have the power to carry out promotional and educational activities in this regard, including directed at smaller companies not subject to the obligations under this Directive.

AddedArticle 7 – paragraph 1: 1. Member States shall ensure that companies take appropriate measures to prevent, or where prevention is not possible or not immediately possible, adequately mitigate potential adverse impacts on human rights, the environment and good governance that have been, or should have been, identified pursuant to Article 6.

AddedArticle 7 – paragraph 2 – introductory part: 2. Companies shall be required to take appropriate measures, including but not limited to the following actions:

AddedArticle 7 – paragraph 2 – point a: (a) develop and implement a prevention action plan, with reasonable and clearly defined timelines for appropriate measures and qualitative and quantitative indicators for measuring improvement. The prevention action plan shall be developed through meaningful stakeholders engagement on an ongoing basis and be accurately tailored to the context of companies operations and value chain. It shall identify and assess if the company’s business model and strategies are adapted to the due diligence requirements; include a prioritisation strategy based on the severity and likelihood of the potential adverse impact in the event that the company is not in a position to prevent or mitigate all potential adverse impacts at the same time; require engagement with affected stakeholders and assessment of potential adverse impacts of temporal suspension or termination of contracts, in order to avoid greater harm, foresee the termination of contracts when the potential adverse impact is linked to a systemic and state organised oppression and consequently cannot be prevented by the actions of the company and when the company assesses that it would not create greater adverse impact than the one intended to prevent or mitigate.

AddedArticle 8 – paragraph 3 – introductory part: 3. Companies shall be required to take appropriate measures, including but not limited to the following actions:

AddedArticle 8 – paragraph 3 – point a: (a) cease and mitigate the adverse impact, where it identifies that it has caused or contributed to that impact throughout its value chain; provide for or cooperate with full remediation of the damages directly to the affected persons or communities. Remedial actions shall: / (i) aim to restore the affected persons to the situation they would be in, had the adverse impact not occurred, if possible, and be proportionate to the significance and scale of the adverse impact and to the contribution of the company’s conduct to the adverse impact; / (ii) be fairly shared between the company and the partner causing or contributing to the damage; / (iii) be determined on the basis of meaningful engagement with affected stakeholders and may include restitution or rehabilitation, apologies, financial or non-financial compensation, assessing whether vulnerable stakeholders benefit equitably in compensation payments or other forms of restitution and taking measures to prevent future adverse impacts; / (iv) not prevent affected stakeholders from engaging the civil liability of companies and shall be duly considered by courts in civil proceedings.

AddedArticle 8 – paragraph 3 – point b: (b) develop and implement a corrective action plan and measures with reasonable and clearly defined timelines for action, tools and qualitative and quantitative indicators for measuring improvement. The corrective action plan shall be developed through meaningful stakeholders engagement on an ongoing basis, with proper follow-through on the implementation of agreed commitments and be accurately tailored to the context of companies operations and value chain. It shall identify and assess if the company’s business model and strategies are adapted to the due diligence requirements; require engagement with affected stakeholders and assessment of the adverse impact of temporal suspension or termination of contracts, in order to avoid greater harm and foresee termination of contracts when the adverse impact is linked to a systemic and state organised oppression and consequently cannot be ceased or mitigated by the actions of the company and when the company assesses that it would not create a greater adverse impact than the one intended to cease or mitigate.

AddedArticle 9 – title: Complaints mechanism

AddedArticle 9 – paragraph 2: 2. Member States shall ensure that complaints may be submitted by all persons, groups, communities, entities and civil society organisations covered by Article 3 points (n), (na), (nb) and (nc), as well as the natural and legal persons representing them. In case the complainant is a child, a legal guardian may bring a complaint on behalf of the child. / (deleted) / (deleted) / (deleted)

AddedArticle 9 – paragraph 4 – introductory part: 4. Member States shall ensure that companies are providing complainants and their representatives with:

AddedArticle 9 – paragraph 4 – point -a (new): (-a) information on how to access such complaints mechanisms and a publicly available description of the procedures;

AddedArticle 9 – paragraph 4 – point -a a (new): (-aa) legitimate, accessible, predictable, safe, equitable, transparent, rights-compatible and adaptable complaints mechanisms that allows stakeholders, including in particular actual and potentially affected rights-holders, to have a meaningful participation in the establishment and evaluation of such independent complaints mechanisms;

AddedArticle 9 – paragraph 4 – point -a b (new): (-ab) guarantees of non-retaliation, confidentiality and anonymity for stakeholders;

AddedArticle 9 – paragraph 4 – point -a c (new): (-ac) timely and exhaustive information, including clear time indications regarding the steps and actions taken in the context of a specific complaint, the result of the procedure and its detailed reasoning;

AddedArticle 9 – paragraph 4 – point a: (a) appropriate, timely and effective follow-up action on the complaint from the company with which they have filed a complaint pursuant to paragraph 1,

AddedArticle 9 – paragraph 4 – point b: (b) the opportunity to meet with the company’s representatives at an appropriate level to discuss potential or actual adverse impacts that are the subject matter of the complaint;

AddedArticle 9 – paragraph 4 – point b a (new): (ba) full remediation, as referred to in and within the meaning of Article 8(3) point (b), through the complaints mechanism and guarantees that harms that are the subject of the complaint will not be repeated. The remedy shall be proportionate to the significance and scale of the adverse impact;

AddedArticle 9 – paragraph 4 – point b b (new): (bb) unhindered access to the substantiated concerns procedure as described in Article 19, to public judicial mechanisms described in Article 22 and to any other judicial or non-judicial mechanism, regardless of their recourse to a complaints mechanism and whether or not they have used or exhausted the avenues of non-judicial mechanisms.

AddedArticle 13: 1. In order to provide support to companies or to Member State authorities on how companies should fulfil their due diligence obligations, the Commission, in consultation with Member States and stakeholders, the European Union Agency for Fundamental Rights, the European Environment Agency, where relevant the Executive Agency for Small and Medium-sized Enterprises, as well as where appropriate with international bodies having expertise in due diligence, shall issue guidelines on the specific obligations under Articles 5 to 11, as well as on the following aspects : / (a) specific high-risk sectors of economic activity leading to significant adverse impacts on human rights, the environment and good governance, including sectors referred to in Article 2(1)(b); / (b) resource and information sharing among companies and other legal entities for the purposes of preventing, mitigating and remediating adverse impacts in compliance with competition law; / (c) specific processes and resources and information sharing for SMEs to support the application of due diligence in their operations; / (d) mapping of companies’ value chains and efficient processes to monitor partners’ behaviours throughout the entire value chain; / (e) specific adverse impacts, including adverse impacts on good governance; / (f) responsible and sustainable trading, purchasing and pricing policies and practices; / (g) facilitation of access to justice for victims, including regarding collective redress, representati…

AddedAnnex I – Part I – Section 1 – title: 1. Rights and prohibitions included in international human rights agreements

AddedAnnex I – Part I – Section 1 – introductory part (new): Such rights and prohibitions include, among others:

AddedAnnex I – Part I – Section 1 – point 1: 1. the people's right to dispose of a land's natural resources and to not be deprived of means of subsistence in accordance with Article 1 of the International Covenant on Civil and Political Rights;

AddedAnnex I – Part I – Section 1 – point 2: 2. the right to life and security in accordance with Article 3 of the Universal Declaration on Human rights;

AddedAnnex I – Part I – Section 1 – point 3: 3. the prohibition of torture, cruel, inhuman or degrading treatment in accordance with Article 5 of the Universal Declaration of Human Rights;

AddedAnnex I – Part I – Section 1 – point 4: 4. the right to liberty and security in accordance with Article 9 of the Universal Declaration of Human Rights;

AddedAnnex I – Part I – Section 1 – point 5: 5. the prohibition of arbitrary or unlawful interference with a person's privacy, family, home or correspondence and attacks on their reputation, in accordance with Article 17 of the Universal Declaration of Human Rights;

AddedAnnex I – Part I – Section 1 – point 6: 6. the prohibition of interference with the freedom of thought, conscience and religion in accordance with Article 18 of the Universal Declaration of Human Rights;

AddedAnnex I – Part I – Section 1 – point 7: 7. the right to enjoy just and favourable conditions of work including a remuneration that provides for a decent living, safe and healthy working conditions and reasonable limitation of working hours. This includes both the right to a fair wage for employees and the right to living income for self-employed workers and smallholders in accordance with Article 7 of the International Covenant on Economic, Social and Cultural Rights;

AddedAnnex I – Part I – Section 1 – point 7 a (new): 7a. the right to an adequate standard of living for oneself and her/his family, including adequate food, clothing and housing, and the right to continuous improvement of living conditions in accordance with Article 11(1) of the International Covenant on Economic, Social and Cultural Rights and Article 25(1) of the Universal Declaration of Human Rights;

AddedAnnex I – Part I – Section 1 – point 8: 8. the prohibition to restrict workers’ access to adequate housing, if the workforce is housed in accommodation provided by the company, and to restrict workers’ access to adequate food, clothing, and water and sanitation in the work place in accordance with Article 11 of the International Covenant on Economic, Social and Cultural Rights;

AddedAnnex I – Part I – Section 1 – point 9: 9. the right of the child to have his or her best interests given primary consideration in all decisions and actions that affect children in accordance with Article 3 of the Convention of the Rights of the Child; the right of the child to develop to his or her full potential in accordance with Article 6 of the Convention of the Rights of the Child; the right of the child to the highest attainable standard of health in accordance with Article 24 of the Convention on the Rights of the Child; the right to social security and an adequate standard of living in accordance with Article 26 and 27 of the Convention on the Rights of the Child; the right to education in accordance with Article 28 of the Convention on the Rights of the Child; the right of the child to be protected from all forms of sexual exploitation and sexual abuse and to be protected from being abducted, sold or moved illegally to a different place in or outside their country for the purpose of exploitation, in accordance with Articles 34 and 35 of the Convention of the Rights of the Child;

AddedAnnex I – Part I – Section 1 – point 10: 10. the prohibition of the employment of a child under the age at which compulsory schooling is completed and, in any case, is not less than 15 years, except where the law of the place of employment so provides in accordance with Article 2 (4) and Articles 4 to 8 of the International Labour Organization Minimum Age Convention, 1973 (No. 138);

AddedAnnex I – Part I – Section 1 – point 11 – introductory part: 11. the prohibition of child labour pursuant to Article 32 of the Convention on the Rights of the Child, including the worst forms of child labour for children (persons below the age of 18 years) in accordance with Article 3 of the of the International Labour Organization Worst Forms of Child Labour Convention, 1999 (No. 182). This includes:

AddedAnnex I – Part I – Section 1 – point 12: 12. the prohibition of forced labour; this includes all work or service that is exacted from any person under the menace of any penalty and for which the said person has not offered himself or herself voluntarily, for example as a result of debt bondage or trafficking in human beings; excluded from forced labour are any work or services that comply with Article 2 (2) of International Labour Organization Forced Labour Convention, 1930 (No. 29) or with Article 8 (3) (b) and (c) of the International Covenant on Civil and Political Rights;

AddedAnnex I – Part I – Section 1 – point 13: 13. the prohibition of all forms of slavery, practices akin to slavery, serfdom or other forms of domination or oppression in the workplace, such as extreme economic or sexual exploitation and humiliation in accordance with Article 4 of the Universal Declaration of Human Rights and Art. 8 of the International Covenant on Civil and Political Rights;

AddedAnnex I – Part I – Section 1 – point 14: 14. the prohibition of human trafficking in accordance with Article 3 of the Palermo Protocol to Prevent, Suppress and Punish Trafficking in Persons Especially Women and Children, supplementing the United Nations Convention against Transnational Organized Crime;

AddedAnnex I – Part I – Section 1 – point 15 – introductory part: 15. the right to freedom of association, assembly, the rights to organise and collective bargaining in accordance with Article 20 of the Universal Declaration of Human Rights, Articles 21 and 22 of the International Covenant on Civil and Political Rights Article 8 of the International Covenant on Economic, Social and Cultural Rights, the International Labour Organization Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) and the International Labour Organization Right to Organise and Collective Bargaining Convention, 1949 (No. 98), including the following rights:

AddedAnnex I – Part I – Section 1 – point 16: 16. the prohibition of unequal treatment in employment, unless this is justified by the requirements of the employment in accordance with Article 2 and Article 3 of the International Labour Organisation Equal Remuneration Convention, 1951 (No. 100), Article 1 and Article 2 of the International Labour Organisation Discrimination (Employment and Occupation) Convention, 1958 (No. 111) and Article 7 of the International Covenant on Economic, Social and Cultural Rights; unequal treatment includes, in particular, the payment of unequal remuneration for work of equal value;

AddedAnnex I – Part I – Section 1 – point 17: 17. the prohibition of withholding an adequate living wage in accordance with Article 7 of the International Covenant on Economic, Social and Cultural Rights;

AddedAnnex I – Part I – Section 1 – point 18 – introductory part: 18. the prohibition of causing any quantative and qualitative environmental degradation, such as harmful soil change, water or air pollution, harmful emissions or excessive water consumption or other impact on natural resources, that

AddedAnnex I – Part I – Section 1 – point 18 – point e: (e) affects ecological integrity, such as deforestation, and the intrinsic value of ecosystems as well as the interrelations between them;

AddedAnnex I – Part I – Section 1 – point 18 – last subparagraph: in accordance with Article 3 of the Universal Declaration of Human Rights, Article 5 of the International Covenant on Civil and Political Rights and Article 12 of the International Covenant on Economic, Social and Cultural Rights and the right to a clean, healthy and sustainable environment;

AddedAnnex I – Part I – Section 1 – point 19: 19. the prohibition to unlawfully evict or take land, forests and waters when acquiring, developing or otherwise use land, forests and waters, including by deforestation, the use of which secures the livelihood of a person in accordance with Article 11 of the International Covenant on Economic, Social and Cultural Rights;

AddedAnnex I – Part I – Section 1 – point 20: 20. the indigenous peoples’ right to the lands, territories and resources which they have traditionally owned, occupied or otherwise used or acquired in accordance with Article 25, 26 (1) and (2), 27, and 29 (2) of the United Nations Declaration on the Rights of Indigenous Peoples;

AddedAnnex I – Part I – Section 1 – point 20 a (new): 20a. the indigenous peoples’ right to self-determination in accordance with Article 3 of the United Nations Declaration on the Rights of Indigenous Peoples and their right to give, modify, withhold or withdraw their free, prior, and informed consent to interventions, decisions and activities that may affect their lands, territories, resources and rights, in accordance with Article 10, 11(2), 19, 28, 29(2) and 32(2) of the United Nations Declaration on the Rights of Indigenous Peoples and Article 6 and 16(2) of the International Labour Organization’s Indigeneous and Tribal Peoples Convention, 1989 (No. 169);

AddedAnnex I – Part I – point 21: 21. a prohibition or right not covered by points 1 to 20 above but included in the human rights agreements listed in Section 2 of this Part.

AddedAnnex I – Part I – Section 2 – title: 2. Human rights and fundamental freedoms conventions and instruments

AddedAnnex I – Part I – Section 2– introductory part (new): Such conventions and instruments include, among others:

AddedAnnex I – Part I – Section 2– indent 6 a (new): — The International Convention for the Protection of All Persons from Enforced Disappearance;

AddedAnnex I – Part I – Section 2– indent 7 a (new): — The United Nations Declaration on the Elimination of Violence against Women;

AddedAnnex I – Part I – Section 2– indent 10: — The United Nations Declaration on the Rights of Indigenous Peoples, the United Nations Development Group’s Guidelines on Indigenous Peoples’ Issues (2009) and UN-REDD Programme Guidelines on Free, Prior and Informed Consent (2013);

AddedAnnex I – Part I – Section 2– indent 10 a (new): — The United Nations Declaration on Human Rights Defenders;

AddedAnnex I – Part I – Section 2– indent 10 b (new): — The International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families;

AddedAnnex I – Part I – Section 2– indent 11: — The United Nations Declaration on the Rights of Persons Belonging to National or Ethnic, Religious and Linguistic Minorities;

AddedAnnex I – Part I – Section 2– indent 11 a (new): — The United Nations Declaration on the Elimination of All Forms of Intolerance and of Discrimination Based on Religion or Belief;

AddedAnnex I – Part I – Section 2 – indent 11 b (new): — The United Nations Declaration on the Rights of Peasants and Other People Working in Rural Areas;

AddedAnnex I – Part I – Section 2 – indent 12 a (new): — The United Nations Protocol against the Smuggling of Migrants by Land, Sea and Air supplementing the United Nations Convention against Transnational Organized Crime;

AddedAnnex I – Part I – Section 2 – indent 14 a (new): — The International Labour Organization’s Indigenous and Tribal Peoples Convention, 1989 (No. 169);

AddedAnnex I – Part I – Section 2 – indent 14 b (new): — The International Labour Organization’s Domestic Workers Convention, 2011 (No. 189);

AddedAnnex I – Part I – Section 2 – indent 14 c (new): — The International Labour Organization’s Violence and Harassment Convention, 2019 (No. 190);

AddedAnnex I – Part I – Section 2 – indent 20 a: — Occupational Safety and Health Convention, 1981 (No. 155)

AddedAnnex I – Part I – Section 2 – indent 23 a (new): — The International humanitarian law instruments including: / - the four Geneva Conventions of 1949: / - Convention (I) for the Amelioration of the Condition of the Wounded and Sick in Armed Forces in the Field; / - Convention (II) for the Amelioration of the Condition of Wounded, Sick and Shipwrecked Members of Armed Forces at Sea; / - Convention (III) relative to the Treatment of Prisoners of War; / - Convention (IV) relative to the Protection of Civilian Persons in Time of War; / - Additional protocols to the Geneva Conventions;

AddedAnnex I – Part I –Section 2 – indent 23 b (new): — The Rome Statute of the International Criminal Court;

AddedAnnex I – Part I – Section 2 – indent 23 c (new): — United Nations Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law;

AddedAnnex I – Part I – Section 2 – indent 23 d (new): — UN General Assembly Resolution 76/300 on the human right to a clean, healthy and sustainable environment;

AddedAnnex I – Part I – Section 2 – indent 23 e (new): — UN General Assembly Resolutions 64/292, 68/157 and 45/8 on the human right to safe drinking water and sanitation;

AddedAnnex I – Part I– Section 2 – indent 23 f (new): — UN Guiding Principles on Business and Human Rights (UNGPs);

AddedAnnex I – Part I – Section 2 – indent 23 g (new): — OECD Due Diligence Guidance for Responsible Business Conduct;

AddedAnnex I – Part I – Section 2 – indent 23 h (new): — The European Convention on Human Rights;

AddedAnnex I – Part I – Section 2 – indent 23 i (new): — The Charter of Fundamental Rights of the European Union;

AddedAnnex I – Part I – Section 2 – indent 23 j (new): — The European Social Charter;

AddedAnnex I – Part I – Section 2 – indent 23 k (new): — The European Convention on the Legal Status of Migrant Workers;

AddedAnnex I – Part I – Section 2 – indent 23 l (new): — The Council of Europe Convention on preventing and combating violence against women and domestic violence.

AddedAnnex I – Part I – Section 3 (new): 3. Good governance and anti-corruption instruments / Such instruments include, among others: / - United Nations Convention against Corruption, 2003; / - United Nations Declaration of Basic Principles of Justice for Victims of Crime and Abuse of Power, 1985; / - United Nations Basic Principles on the Independence of the Judiciary, 1985; / - Council of Europe Civil law Convention on Corruption, 1999; / - OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, 1997; / - Convention drawn up on the basis of Article K.3(2)(c) of the Treaty on European Union on the Fight Against Corruption Involving Officials of the European Communities or Officials of Member States of the European Union, 1997; / - Principle Ten on Anti-Corruption of the UN Global Compact; / - United Nations Code of Conduct for Law Enforcement Officials, 1979.