The objective of this directive is to impose rules on companies in the European Union regarding how they manage the social and environmental impacts caused by their activities, including the activities of their subsidiaries and business partners outside Europe’s borders. The text also provides a framework for associated sanctions, civil liability in case of violation of these requirements and the obligation to adopt a plan to ensure the compatibility of their business model with the Paris Agreement on climate.
With the entry into force of this directive, the European authorities wish to ensure that the activities of companies comply with the standards of human rights and environmental protection as defined by the International Labour Organization and the SDGs. The text provides for improved remedies for those affected by the negative impacts of companies by allowing them to sue in European courts. This groundbreaking legislative initiative thus seeks to promote a sustainable global economy and the integration of sustainability into the corporate governance and risk management system.
The rules of the directive will apply to the “chain of activity” of companies, which includes the company’s own activities, the activities of its upstream business partners and part of the activities of its downstream business partners. The use phase of the company’s products or the provision of services is excluded from the scope.