Changes from report parliamentary committee draft to plenary report

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;