Changes from report parliamentary committee draft to plenary report

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;

Article 1 – paragraph 1 – subparagraph 2: deleted

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RemovedArticle 2 – paragraph 1 – point a: (a) the company had more than 250 employees on average and had a net worldwide turnover of more than EUR 40 million in the last financial year for which annual financial statements have been prepared;

AddedArticle 1 – paragraph 2: 2. This Directive shall not constitute grounds for reducing the level of protection of human rights, including employment and social rights as stipulated in existing Union and national legislation, the environment or the climate provided for by the Member States or by applicable collective agreements, at the time of the adoption of this Directive.

Change 21

ChangedArticle 2 – paragraph 1 – point b – introductory part:a: (b)(a) theThe company did not reach the thresholds under point (a), but had more than 50250 employees on average and had a net worldwide turnover of more than EUR 840 million in the last financial year for which annual financial statements have been prepared, provided that at least 30% of this net turnover was generated in one or more of the following sectors:prepared;

Change 22

RemovedArticle 2 – paragraph 1 – point b – point i: (i) the manufacture of textiles, wearing apparel, leather and related products (including footwear), and the wholesale trade and retail of textiles, clothing and footwear;

AddedArticle 2 – paragraph 1 – point b – introductory part: (b) the company did not reach the thresholds under (a) but is the ultimate parent company of a group that had 500 employees and a net worldwide turnover of more than 150 million in the last financial year for which annual financial statements have been prepared.

RemovedArticle 2 – paragraph 1 – point b – point ii: (ii) agriculture, forestry, fisheries (including aquaculture), the manufacture of food products, marketing and advertising of food and beverages, and the wholesale trade of agricultural raw materials, live animals, animal products, wood, food, and beverages;

AddedArticle 2 – paragraph 1 – point b – point i: deleted

RemovedArticle 2 – paragraph 1 – point b – point iii: (iii) energy, the extraction, 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 ii: deleted

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ChangedArticle 2 – paragraph 1 – point b – point iii a (new): (iiia) construction and relatediii: activities;deleted

Change 24

RemovedArticle 2 – paragraph 1 – point b – point iii b (new): (iiib) the provision of financial services, such as loans, credits, financing, pensions, market funding, risk management, payment services, securitisation, insurance or reinsurance, investment services and activities and other financial services;

AddedArticle 2 – paragraph 2 – point a: (a) the company generated a net worldwide turnover of more than EUR 150 million, provided that at least EUR 40 million was generated in the Union in the financial year preceding the last financial year, including turnover generated by third party companies with whom the company and/or its subsidiaries has entered into a vertical agreement in the Union in return for royalties;

RemovedArticle 2 – paragraph 1 – point b – point iii c (new): (iiic) the production, provision and distribution of information and communication technologies or related services, including hardware, device or component manufacturers, software solutions, including artificial intelligence, surveillance, facial recognition, data storage or processing, telecommunication services, including internet service providers or exchange points, web-based and cloud-based services, including social media and networking, messaging, e-commerce, delivery, mobility, and other platform services.

AddedArticle 2 – paragraph 2 – point b: (b) the company did not reach the thresholds under (a) but is the ultimate parent company of a group that had 500 employees and a net worldwide turnover of more than 150 million and at least 40 million was generated in the Union in the last financial year for which annual financial statements have been prepared, including turnover generated by third party companies with whom the company and/or its subsidiaries has entered into a vertical agreement in the Union in return for royalties.

RemovedArticle 2 – paragraph 1 – point b a (new): (ba) the company did not reach the thresholds under point (a), but is publicly listed on the stock exchange, and had more than 50 employees on average and a net worldwide turnover of more than EUR 8 million in the last financial year for which annual financial statements have been prepared.

AddedArticle 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 and other workers in non-standard forms of employment 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.

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 ;

Article 3 – paragraph 1 – point a – point iii: deleted

Change 25

Removedincorporated into point (i)

AddedArticle 3 – paragraph 1 – point a – point iv – indent 8: deleted / (deleted) / (deleted)

Change 26

ChangedArticle 3 – paragraph 1 – point a – point iv – indent 19 a (new): - a market operator as defined in Article 4(1) (18) of Directive 2014/65/EU of the European Parliament and of the9: Council;deleted

Change 27

RemovedArticle 3 – paragraph 1 – point a – point iv – indent 19 b (new): - a credit rating agency as defined in point (b) of Article 3 of Regulation (EC) 1060/2009 of the European Parliament and of the Council on credit rating agencies127a; / 127a OJ L 302, 17.11.2009, p. 1.

AddedArticle 3 – paragraph 1 – point a – point iv – indent 10: deleted

RemovedArticle 3 – paragraph 1 – point a – point iv – indent 19 c (new): - an administrator as defined in point 6 of Article 3 (1) of Regulation (EU) 2016/1011 of the European Parliament and of the Council127b; / 127b Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).

AddedArticle 3 – paragraph 1 – point a a (new): (aa) 'investee company' means a company in which an institutional investor or asset manager invests which cannot be considered as a controlled undertaking;

RemovedArticle 3 – paragraph 1 – point b: (b) ‘adverse environmental impact’ means an adverse impact resulting from the violation of one of the prohibitions pursuant to the international environmental conventions listed in the Annex, Part II or from the failure to comply with obligations under those conventions, or a violation of the obligations set out in Directive 2008/99/EC of the European Parliament and of the Council127c, or any adverse impact on one of the following environmental categories: / - air and atmosphere, including through air pollution; / - water and access to water, including water pollution, water contamination and depletion of freshwater; / - soil, including soil pollution, soil contamination including from waste disposal and treatment, soil erosion, land use and land degradation / - biodiversity and animal welfare, including damage to wildlife, seabed and marine environment, flora, natural habitats and ecosystems; / - climate and climate change mitigation and adaptation, including greenhouse gas emissions; / - the transition to a circular economy, including impairment of reusability and recyclability; / 127c Directive 2008/99/EC of the European Parliament and of the Council of 19 November 2008 on the protection of the environment through criminal law (OJ L 328, 6.12.2008, p. 28).

AddedArticle 3 – paragraph 1 – point a b (new): (ab) 'institutional investor' means an entity as defined by Article 2(e) of Directive 2007/36/EC, within the scope of Article 2 of this Directive;

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;

Change 28

ChangedArticle 3 – paragraph 1 – point c a (new):b: (ca)(b) ‘adverse good governanceenvironmental impact’ means anyan adverse impact on goodthe governanceenvironment resulting from the violationfailure ofto onecomply ofwith theobligations prohibitionsin enshrinedline inwith the international conventionsrelevant listedprovisions inof the Annex, Partinstruments IIalisted orin failurePart toI, complypoints with18 obligationsand under19, thoseof conventions,the orAnnex anyand adversePart impactII onof the proper functioningAnnex, oftaking publicinto administrationaccount, andwhere services,available, the rule of law, democratic electoralnational systems,legislation and freedom ofmeasures expression;linked suchto activitiesthose couldprovisions includerelated bribery,to corruption,the blackmail,international taxtexts evasionlisted andin avoidance,Part illegalI, politicalpoints funding18 orand exercise19, of influence, andthe otherAnnex businessand practicesPart detrimentalII toof goodthe governance;Annex;

Change 29

RemovedArticle 3 – paragraph 1 – point e – introductory part: (e) ‘business relationship’ means a relationship between on the one hand a company or its subsidiaries, and on the other hand a contractor, subcontractor, franchisee or any other legal entities (‘partner’) in its value chain

AddedArticle 3 – paragraph 1 – point c: (c) ‘adverse human rights impact’ means an adverse impact on persons resulting from any action 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;

Change 30

ChangedArticle 3 – paragraph 1 – point ec –a point(new): ii:(ca) (ii)‘adverse thatimpact’ performsmeans businessany operationspotential relatedor toactual theadverse productshuman orrights servicesor ofadverse theenvironmental company;impact;

Change 31

AddedArticle 3 – paragraph 1 – point d: (d) ‘subsidiary’ means a legal person as defined in Article 2, point (10), of Directive 2013/34/EU and a legal person through which the activity of a ‘controlled undertaking’ as defined in Article 2(1), point (f), of Directive 2004/109/EC of the European Parliament and of the Council 128 is exercised;

AddedArticle 3 – paragraph 1 – point e – introductory part: (e) ‘business relationship’ means a direct or indirect relationship of a company with a contractor, subcontractor, or other entities in its value chain:

AddedArticle 3 – paragraph 1 – point e – point i: (i) with whom the company has a commercial agreement or to whom the company provides financial services;

AddedArticle 3 – paragraph 1 – point e – point ii: (ii) that performs activities related to the products or services of the company;

Article 3 – paragraph 1 – point f: deleted

Change 32

RemovedArticle 3 – paragraph 1 – point g: (g) ‘value chain’ means all upstream and downstream activities, operations, including marketing and advertising related to, and entities involved in, the production and supply of goods or the provision of services by a company, including the development of the product or the service and the use and disposal of the product.

AddedArticle 3 – paragraph 1 – point g: (g) ‘value chain’ means:

RemovedArticle 3 – paragraph 1 – point h: (h) ‘independent third-party verification’ means verification of the compliance by a company, or parts of its value chain, with human rights and environmental requirements resulting from the provisions of this Directive by an entity which is independent from the company, free from any conflicts of interests, has experience and competence in environmental and human rights matters and is accountable for the quality and reliability of the audit;

AddedArticle 3 – paragraph 1 – point g – point i (new): (i) activities related to, and entities involved in, the production, design, sourcing, extraction, manufacture, transport, storage and supply of raw materials, products or parts of a company’s product and the development of a company’s product or the development or provision of a service, and