EU Publishes Draft Company Sustainability Due Diligence Directive – Company/Business Legislation

European Union:

EU Publishes Draft Company Sustainability Due Diligence Directive

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Editor’s Notice: Dr. Johannes Weichbrodt is companion
and James Ford and Libby Reynolds are associates at Mayer
Brown LLP. This publish relies on a Mayer Brown memorandum by Dr.
Weichbrodt, Mr. Ford, Ms. Reynolds, Sam EastwoodMusonda Kapotwe and Peter Pears. Associated analysis from the
Program on Company Governance contains The Illusory Promise of Stakeholder
 (mentioned on the Discussion board right here) and Will Firms Ship Worth to All
, each by Lucian A. Bebchuk and Roberto Tallarita;
and For Whom Company Leaders
Cut price
 (mentioned on the Discussion board right here); and Stakeholder Capitalism within the Time of COVID,
each by Lucian Bebchuk, Kobi Kastiel, and Roberto Tallarita
(mentioned on the Discussion board right here).

On 23 February 2022, the European Fee revealed its much-anticipated
draft company sustainability and due diligence
 (the Draft Directive),
after a lot of delays (see our Earlier Weblog). The Draft Directive units out a
proposed EU normal for human rights and environmental due
diligence (HREDD). This contains an obligation for
corporations to take applicable measures to determine precise and
potential opposed human rights and environmental impacts arising
from their very own operations or these of their subsidiaries and, the place
associated to their worth chains, from their “established
enterprise relationships”. The Draft Directive additionally gives a
mechanism for sanctions to be imposed for non-compliance with the
due diligence obligations and gives for director accountability
and accountability in relation to an organization’s HREDD

While the Draft Directive stays topic to additional
legislative scrutiny and approval, it gives essentially the most detailed
perception but as to the scope and type of the potential EU HREDD
obligations, and it gives a useful template for corporates to
proceed creating their due diligence insurance policies and procedures
designed to determine, assess and mitigate opposed human rights and
environmental impacts-both of their operations and of their provide

Moreover, the Draft Directive could have implications for
banks, insurers and different monetary establishments, which could have
to undertake additional due diligence on purchasers and their
subsidiaries to whom they prolong loans, credit score and different monetary
providers1 in mild of the obligations set out


Initially revealed 15 March 2022 (Harvard Legislation Faculty Discussion board
on Company Governance)


1. “Different monetary providers” will not be expressly
outlined within the Draft Directive.

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article gives data and feedback on authorized
points and developments of curiosity. The foregoing isn’t a
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mentioned herein.

Beforehand revealed within the Harvard Legislation Faculty Discussion board on
Company Governance.

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