The European Parliament sets out its vision for EU rules on corporate due diligence and accountability

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On 10 March, the European Parliament adopted a report with recommendations to the Commission on due diligence rules for companies. This Report will feed into the European Commission’s work, as it prepares the publication of an initiative on Sustainable Corporate Governance in June 2021.

The work of the European Parliament’s Committee on Legal Affairs, driven by Rapporteur Lare Wolters (S&D, NL) has led to the adoption of a detailed position and recommendations for an EU Directive on corporate due diligence and accountability.

The Report clearly calls on the European Commission to propose a legislative initiative and establishes the scope the European Parliament wishes to see established. The European Parliament wishes to extend the scope to “the entire value-chain” but does add that it should “involve having a prioritisation policy”. The recommendations define value chain as “all activities, operations, business relationships and investment chains of an undertaking and includes entities with which the undertaking has a direct or indirect business relationship, upstream and downstream”.

The report clearly states the objective to ensure that companies under the scope of a future proposal fulfil their duty to respect human rights, the environment and good governance.

Concerning the type of companies covered by the legislation, despite an attempt from some EPP MEPs to exempt micro-undertakings and SMEs from the scope, the final report covers all undertakings, including publicly listed small and medium-sized undertakings and high-risk small and medium-sized undertakings. The report also introduces the idea of risk-based proportionality for SMEs, which has also been rumoured to appear in the Commission’s plans. The report does, however, specify that specific measures should be put in place to support smaller undertakings in fulfilling their obligations.

This document will be the reference point for the European Parliament’s position in future discussions on the topic once the Commission publishes its proposal.

To know more on the topic and on Ecommerce Europe’s position, reach out to juliettebeaulaton@ecommerce-europe.eu.

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