Changes from adopted text to adopted text

RemovedRecital 29: (29) To comply with due diligence obligations, companies need to take appropriate measures with respect to identification, prevention and bringing to an end adverse impacts that they caused, contributed or are directly linked to. ‘Appropriate measures’ should mean measures that are capable of achieving the objectives of due diligence and effectively addressing the adverse impact identified pursuant to Article 6 in a manner proportionate and commensurate to the degree of severity and the likelihood of the adverse impact and proportionate and commensurate to the size, resources and capacities of the company, taking into account the circumstances of the specific case, including the nature of the adverse impact, characteristics of the economic sector, the nature of the company’s specific activities, products, services, the specific business relationship. For the purposes of Articles 7 and 8, in cases where a company has caused or may have caused an impact, appropriate measures should be understood as measures which aim to prevent or mitigate an impact, and remediate any damage caused by an impact. For the purposes of Articles 7 and 8, in cases where a company has contributed to or may have contributed to an impact, appropriate measures should 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 impact, and contributing to remediating any damag…

RemovedRecital 30: (30) Under the due diligence obligations set out by this Directive, a company should identify and assess actual or potential adverse human rights and environmental impacts. In order to allow for a comprehensive identification and assessment of adverse impacts, such identification and assessment should be based on meaningful stakeholder engagement and quantitative and qualitative information. 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 and assessment of adverse impacts should include assessing the human rights and environmental context in a dynamic way and continuously, including 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. Regulated financial undertakings providing financial services should identify the adverse impacts at the inception of the contract and before subsequent financial operations, and if notified of possible risks via the procedures in Art.9, during the provision of the service. When identifying and assessing adverse impacts, companies should also identify and assess the impact of a business relationship’s business model and strategies, including purchasing practices.

RemovedRecital 30 a (new): (30a) Where the company cannot prevent, bring to an end or mitigate all the identified and assessed adverse impacts simultaneously, it should be allowed to prioritise the order in which it takes appropriate measures based on the severity and likelihood of the adverse impact and taking into account risk factors, by developing, implementing and regularly reviewing a prioritisation strategy. In line with the relevant international framework, the severity of an adverse impact should be assessed based on 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. Once the most severe and adverse impacts are addressed, the company should address less severe and less likely adverse impacts.

RemovedRecital 30 b (new): (30b) Companies should prioritise impacts on the basis of severity and likelihood. The degree of leverage a company has over a business relationship is not relevant to its prioritisation decisions or processes. However, the degree of leverage can influence the appropriate measures that a company chooses to adopt in order to effectively mitigate and/or prevent impacts associated with business partners.

RemovedRecital 31: deleted

RemovedRecital 32: (32) In line with international standards, prevention and mitigation as well as bringing to an end and minimisation 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 disengagement is a last-resort action, in line with the Union`s policy of zero-tolerance on child labour, the Union’s strategy on rights of the Child and the target date of 2025 proclaimed by the United Nations for the full elimination of child labour worldwide. Terminating a business relationship in which child labour was found could expose the child to even more severe adverse human rights impacts. In the same line, women in precarious labour conditions could face more severe adverse human rights impacts thus increasing their vulnerability. This should therefore be taken into account when deciding on the appropriate action to take, and disengagement should be avoided where the impact of disengagement would be greater than the adverse impact the company is seeking to prevent or mitigate. In situations of state-imposed forced labour, where the adverse impact is organised by political authorities, unhindered engagement with those adversely impacted and mitigation are not possible. This Directive should ensure that companies terminate a business relationship where s…

RemovedRecital 34: (34) So as to comply with the prevention and mitigation obligation under this Directive, companies should be required to take the following appropriate measures, where relevant. Where necessary due to the complexity of prevention measures, companies should develop and implement a prevention action plan. Companies should consider establishing through contractual provisions with a partner with whom they have a business relationship that it will ensure compliance with the code of conduct and, as necessary, a prevention action plan. Partners with whom the company has a business relationship could be asked to seek corresponding contractual provisions from its partners to the extent that their activities are part of the companies’ value chain.

RemovedRecital 34 a (new): (34a) The contractual provisions should not be such as to result in the transfer of responsibility for carrying out due diligence in accordance with this Directive and the liability for failing to do so. Moreover, the contractual provisions should be fair, reasonable and non-discriminatory under the circumstances, and should reflect the joint tasks of parties to conduct due diligence in ongoing cooperation. Companies should also assess whether the business partner can reasonably be expected to comply with those provisions. Often contractual terms are unilaterally imposed on a supplier by a buyer, and any breach thereof is likely to result in unilateral action by the buyer, such as termination or disengagement. Such unilateral action is not appropriate in the context of due diligence and would probably itself result in adverse impacts. In cases where the breach of such contractual provisions gives rise to a potential adverse impact, the company should first take appropriate measures to prevent or adequately mitigate such impacts, rather than considering ending or suspending the contract, in accordance with applicable law. 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 financial and administrative support for an SME with which they have a business relationship such as financing, for example, through direct financing, low-interest loans, gu…

RemovedRecital 35: deleted

RemovedRecital 36: (36) In order to ensure that prevention and mitigation of potential adverse impacts is effective, companies should prioritise engagement with business relationships in the value chain, instead of terminating the business relationship, as a last resort action after attempting at preventing and mitigating adverse potential impacts without success. However, the Directive should also, for cases where potential adverse impacts that a company caused or contributed to and that could not be addressed by the described prevention or mitigation measures, and there is no reasonable prospect of change, refer to the obligation for companies to refrain from entering into new or extending existing relations with the partner in question and, where the law governing their relations so entitles them to, as a last resort, in line with responsible disengagement, to either temporarily suspend commercial relationships with the partner in question, while pursuing prevention and mitigation efforts; or to terminate the business relationship with respect to the activities concerned on account of the severity of the potential adverse impact, or if the conditions for temporary suspension are not met. In order to allow companies to fulfil that obligation, Member States should provide for the availability of an option to terminate or suspend the business relationship in contracts governed by their laws. In deciding to terminate or suspend a business relationship, the company should assess whether the adver…

RemovedRecital 37: (37) Industry schemes and multi-stakeholder initiatives can help create additional leverage to identify, mitigate, and prevent adverse impacts. Therefore it should be possible for companies to participate in such initiatives to support aspects of their due diligence, including to coordinate joint leverage, achieve efficiencies, scale up best practices, and seek expertise relevant to specific sectors, geographies, commodities or risk issues. The meaning of initiatives is broad and includes initiatives that support, monitor, evaluate, certify and/or verify aspects of a company’s due diligence, or the due diligence conducted by its subsidiaries and/or business relationships. Such initiatives may be developed and overseen by governments, industry associations, groupings of interested organisations, social partners or civil society organisations, and include monitoring organisations, global framework agreements, sector dialogues and initiatives that certify aspects of due diligence. In order to ensure full information on such initiatives, the Directive should also refer to the possibility for the Commission and the Member States to facilitate the dissemination of information on such schemes or initiatives and their outcomes. The Commission, in collaboration with Member States, the OECD and relevant stakeholders, should issue guidance for assessing the precise scope, alignment with this Directive, and credibility of industry schemes and multi-stakeholder initiatives. Companies part…

RemovedRecital 38: (38) Under the due diligence obligations set out by this Directive, if a company identifies actual human rights and environmental adverse impacts, 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 extent of such impacts, whilst pursuing efforts to bring the adverse impact to an end, and implementing a corrective action plan, developed in consultation with affected stakeholders. Minimisation of the extent of adverse impacts should require an outcome that is the closest possible to bringing the adverse impact to an end. 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 and environmental adverse impacts to an end and minimisation of their extent, where relevant depending on the circumstances.

RemovedRecital 39: (39) So as to comply with the obligation of bringing to an end and mitigating the extent of actual adverse impacts under this Directive, companies should be required to take the following actions, where relevant. They should neutralise the adverse impact or adequately mitigate its extent by restoring the affected persons, groups and communities and/or the environment back to a situation equivalent or as close as possible to their situation prior to the adverse impact. Where necessary due to the fact that the adverse impact cannot be immediately brought to an end, companies should develop and implement a corrective action plan with reasonable and clearly defined timelines for the implementation of appropriate measures and action and qualitative and quantitative indicators for measuring improvement. Companies could also establish through contractual provisions with a partner with whom they have a business relationship that they will ensure compliance with the code of conduct and, as necessary, a corrective 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. The contractual provisions should be accompanied by measures to support carrying out due diligence as outlined in this Directive. Moreover, contractual provisions should be fair, reasonable and non-discrimin…

RemovedRecital 40: deleted

RemovedRecital 41: (41) In order to ensure that bringing actual adverse impacts to an end or minimising them is effective, companies should prioritise engagement with business relationships in the value chain, instead of terminating the business relationship, as a last resort action after attempting at bringing actual adverse impacts to an end or minimising them without success. However, this Directive should also, for cases where actual adverse impacts that a company caused or contributed to could not be brought to an end or adequately mitigated by the described measure, and there is no reasonable prospect of change, refer to the obligation for companies to refrain from entering into new or extending existing relations with the partner in question and, where the law governing their relations so entitles them to, as a last resort, in line with responsible disengagement, 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, on account of the severity of the actual adverse impact or if the conditions for temporary suspension are not met. In order to allow companies to fulfil that obligation, Member States should provide for the availability of an option to terminate or suspend the business relationship in contracts governed by their laws. In deciding to terminate or suspend a business relationship, the company sho…

RemovedRecital 41 a (new): (41a) Where a company has caused or contributed to an actual adverse impact, the company should take appropriate measures to remediate that impact. Remedial measures should 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, and be developed taking into account the needs and views expressed by affected stakeholders. They may include, but are not limited to, compensation, restitution, rehabilitation, public apologies, reinstatement or cooperation in good faith with investigations. In certain situations, financial compensation may be a necessary way to provide such restoration. Where a company is directly linked to an adverse impact, it should be allowed to voluntarily participate in any remedial measures, where appropriate, and consider using its leverage with responsible parties to enable the remediation of any damage caused by an impact. Member States should ensure that stakeholders affected by an adverse impact should not be required to seek remediation prior to filing claims in court.

RemovedRecital 42: (42) Companies should provide a publicly available and effective notification and non-judicial grievance mechanisms at operational level, that can be used by persons and organisations to notify them of or raise grievances and request remediation in case of legitimate concerns regarding actual or potential human rights, environmental adverse impacts in the value chain. Persons and organisations who could submit such grievances should include persons who are affected or have reasonable grounds to believe that they might be affected and their legitimate representatives, trade unions and other workers’ representatives representing individuals working in the value chain concerned and credible and experienced organisations the purpose of which includes the protection of the environment. Notifications may be submitted by the aforementioned persons and organisations as well as civil society organisations active in the areas related to the value chain concerned where they have knowledge about a potential or actual adverse impact, and legal and natural persons defending human rights and the environment. Companies should establish a procedure for dealing with those notifications and grievances and inform workers, trade unions and other workers’ representatives, where relevant, about such processes. Companies should provide the possibility of submitting notifications and grievances through collaborative arrangements , including industry initiatives, with other companies or organisations,…

RemovedRecital 43: (43) Companies should continuously verify the implementation and monitor the adequacy and effectiveness of their actions taken in accordance with this Directive. They should carry out assessments of their own operations, products and services, those of their subsidiaries and those of their business relationships, to monitor the effectiveness of the identification, prevention, minimisation, bringing to an end, mitigation and remediation of human rights and environmental adverse impacts. Such assessments should verify that adverse impacts are properly identified, due diligence measures are implemented and adverse impacts have actually been prevented or brought to an end. In order to ensure that such assessments are up-to-date, they should be carried out continuously and after a significant change occurs, and be revised continuously if there are reasonable grounds to believe that significant new risks of adverse impact could have arisen. Companies should retain documentation demonstrating their compliance with this requirement for 10 years.

RemovedRecital 44: (44) Like in the existing international standards set by the United Nations Guiding Principles on Business and Human Rights and the OECD framework, it forms part of the due diligence requirement to communicate externally relevant information on due diligence policies, processes and activities conducted to identify and address actual or potential adverse impacts, including the findings and outcomes of those activities. Directive 2013/34/EU as regards corporate sustainability reporting sets out relevant reporting obligations for the companies covered by this directive as well as Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector, for financial undertakings. In order to avoid duplicating reporting obligations, this Directive should therefore not introduce any new reporting obligations in addition to those under Directive 2013/34/EU for the companies covered by that Directive as well as the reporting standards that should be developed under it, nor should it introduce any new reporting obligations in addition to those under Regulation (EU) 2019/2088. As regards companies that are within the scope of this Directive, but do not fall under Directive 2013/34/EU, in order to comply with their obligation of communicating as part of the due diligence under this Directive, they should publish on their website an annual statement that is consistent with those requirements in at least one of the official languages of the Union.

RemovedRecital 44 a (new): (44a) Requirements on companies which are under the scope of this Directive and at the same time are subject to reporting requirements under Articles 19a, 29a and 40a of Directive 2013/34/EU and therefore should report on their due diligence process as stipulated in Articles 19a, 29a and 40a of Directive 2013/34/EU should be understood as a requirement for companies to describe how they implement due diligence as provided for in this Directive. When fulfilling the requirements of Directive 2013/34/EU to report on actions taken to identify potential or actual adverse impacts, companies should explain whether they prioritised the order in which they took appropriate measures, how that approach was applied, and why it was necessary to prioritise. When fulfilling the requirements of Directive 2013/34/EU to report on any actions taken by the undertaking to prevent, mitigate, remediate or bring an end to actual or potential adverse impacts, and the result of such actions, the company should also disclose the number of instances where it decided to disengage, the reason for this disengagement and the location of the concerned business relationships without disclosing their identity.

RemovedRecital 44 b (new): (44b) It is not the objective of this Directive to require companies to publicly disclose intellectual capital, intellectual property, know-how or the results of innovation that would qualify as trade secrets as defined in Directive (EU) 2016/943 of the European Parliament and of the Council. Reporting requirements provided for in this Directive should therefore be without prejudice to Directive (EU) 2016/943. This Directive should also apply without prejudice to Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC.

RemovedRecital 44 c (new): (44c) Companies should take appropriate measures to carry out meaningful engagement with affected stakeholders allowing for genuine interaction and dialogue in their due diligence process. Engagement should cover information and consultation of affected stakeholders and should be comprehensive, structural, effective, timely and culturally and gender responsive. There are situations in which it will not be 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. . In these cases companies should engage in meaningful engagement 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. Consultation should be ongoing and companies should provide comprehensive, targeted and relevant information to affected stakeholders. Affected stakeholders should have the right to request additional written information, which should be provided by the company within a reasonable amount of time and in an appropriate and comprehensive format. Where such a request is refused, affected stakeholders should have the right to a written justification for such refusal. The information and consultation of affected stakeholde…

RemovedRecital 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 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 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 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 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 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 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 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 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 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.

RemovedRecital 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.

RemovedRecital 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.

RemovedRecital 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.

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 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.

RemovedRecital 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.

RemovedRecital 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.

RemovedRecital 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.

RemovedRecital 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.

RemovedRecital 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.

RemovedRecital 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.

RemovedRecital 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.

RemovedRecital 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.

RemovedRecital 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.

RemovedRecital 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.

RemovedArticle 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

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

RemovedArticle 1 – paragraph 1 – subparagraph 2: deleted

RemovedArticle 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.

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;

RemovedArticle 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 i: deleted

RemovedArticle 2 – paragraph 1 – point b – point ii: deleted

RemovedArticle 2 – paragraph 1 – point b – point iii: deleted

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

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;