WHAT IS THE AIM OF THE DIRECTIVE?
Directive (EU) 2024/1760 aims to ensure that large European Union (EU) and non-EU companies with a significant presence in the EU integrate sustainable and responsible practices in their domestic and international operations. It does so by making companies:
- assess and address the actual and potential negative human rights and environmental impacts of their own operations, along with those of their subsidiaries and business partners, throughout the chains of activities of those companies;
- accountable for lack of compliance and liable for violations of the obligations;
- adopt and put into effect a transition plan for climate change mitigation that aims to ensure, through best efforts, compatibility with the transition to a sustainable economy in line with the Paris Agreement 1.5 °C global warming target and requirements.
The directive does not reduce existing national human, employment, social, environmental or climate change provisions.
KEY POINTS
The directive:
- applies to EU and non-EU companies that meet one of the following conditions:
- had over 1,000 employees and a net worldwide (for EU companies) or a net EU turnover (for non-EU companies) of over €450 million in the latest financial year;
- did not reach those thresholds, but is the ultimate parent company of a group that did;
- entered into franchising and licensing agreements with royalties of more than €22.5 million and net turnover of more than €80 million worldwide / in the EU (either alone or as ultimate parent company of a group).
Due diligence
Companies must conduct risk-based human rights and environmental due diligence by:
- integrating, in consultation with employees and their representatives, the following due diligence measures into their policies and risk management systems:
- a description of their long-term approach,
- a code of conduct containing rules and principles for the company and its subsidiaries and business partners,
- a presentation of the processes put in place, including compliance verification;
- updating due diligence policies swiftly after a significant development and at least every 24 months;
- identifying actual or potential negative human rights and environmental impacts in their own operations and those of their subsidiaries and in their chains of activities, in addition to prioritising addressing impacts based on severity and likelihood;
- preventing and mitigating potential problems, bringing actual ones to an end and minimising their damage;
- providing remediation1 for actual adverse impacts;
- engaging with the relevant stakeholders at various stages of the due diligence process;
- establishing accessible and publicly available notification and complaints procedures, including appropriate follow-up, where individuals and organisations may raise concerns anonymously and confidentially in accordance with national law;
- monitoring regularly (at least every 12 months) the effectiveness of their due diligence policy throughout their operations, those of their subsidiaries and in their chains of activities;
- communicating publicly on their due diligence by publishing an annual statement (in line with Directive (EU) 2022/2464 (the corporate sustainability reporting directive)) on their website and making it available to the European single access point;
- keeping all documentation on their due diligence compliance for at least five years.
They must adopt and put into effect a climate change transition plan containing:
- five-year time-bound targets between 2030 and 2050;
- descriptions of measures to reach the targets;
- details of the investment and funding involved;
- explanations of the roles administrative, management and supervisory bodies play.
Non-EU companies must appoint an authorised representative as a contact point for national supervisory authorities.
Information support
The European Commission:
- in consultation with EU Member States, stakeholders and others and in order to help companies, national authorities and stakeholders meet their legislative obligations, published the following:
- guidance on voluntary model contractual clauses, by 26 January 2027,
- general guidance on how to conduct due diligence, focusing on the identification process, the prioritisation of impacts, adaptation of purchasing practices, remediation, stakeholder engagement and responsible disengagement,
- practical guidance on the climate transition plan,
- information on risk factors,
- information on data, information sources and digital tools,
- information on sharing resources and information for the purpose of compliance,
- information for stakeholders and their representatives on how to engage throughout the due diligence process,
- information on fitness criteria for industry schemes and multi-stakeholder initiatives and third-party verification,
- general and sector-tailored guidelines for specific human rights and environmental problems;
- establishes a single helpdesk for companies seeking information, guidance and support.
Member States individually or jointly operate websites, platforms or portals to provide information and support to companies, especially small and medium-sized enterprises.
Supervision
Member States:
- designate one or more supervisory authorities with the powers to:
- receive and act within a reasonable time on any substantiated concerns raised,
- require companies to provide information,
- carry out investigations,
- order a company to stop breaking the law,
- impose penalties or interim measures;
- ensure a company can be held liable for any damage, provided that:
- the company intentionally or negligently failed to respect the law,
- the damage occurred as a result of that failure (however, a company cannot be held civilly liable if the damage was caused by its business partners alone);
- lay down penalties for companies breaking the law.
The Commission establishes a European Network of Supervisory Authorities to facilitate cooperation between national bodies and the coordination and alignment the various workstreams in their field of competence.
Other rules
The directive amends:
The Commission:
- may adopt delegated acts to amend the Annex on rights and prohibitions in international human rights and environmental treaties and conventions;
- will submit a report to the European Parliament and the Council of the European Union no later than 26 July 2026 on whether additional sustainability due diligence requirements should be introduced for regulated financial undertakings with respect to the provision of financial services and investment activities, and thereafter an implementation report every five years.
FROM WHEN DO THE RULES APPLY?
The directive has to be transposed into national law by 26 July 2026.
The directive applies according to the following timetable:
- from 26 July 2027: companies with over 5,000 employees and a net turnover of over €1.5 billion;
- from 26 July 2028: companies with over 3,000 employees and a net turnover of over €900 million;
- from 26 July 2029: companies with over 1,000 employees and a net turnover of over €450 million.
BACKGROUND
For further information, see:
KEY TERMS
- Remediation. Restoring the situation of the affected individuals, communities and environment to its original state by financial compensation and other means, provided by the company and proportionate to its implication.
MAIN DOCUMENT
Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 (OJ L, 2024/1760, 5.7.2024).
RELATED DOCUMENTS
Regulation (EU) 2024/3015 of the European Parliament and of the Council of 27 November 2024 on prohibiting products made with forced labour on the Union market and amending Directive (EU) 2019/1937 (OJ L, 2024/3015, 12.12.2024).
Regulation (EU) 2023/1115 of the European Parliament and of the Council of 31 May 2023 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation and repealing Regulation (EU) No 995/2010 (OJ L 150, 9.6.2023, pp. 206–247).
Successive amendments to Regulation (EU) 2023/1115 have been incorporated into the original text. This consolidated version is of documentary value only.
Regulation (EU) 2023/1542 of the European Parliament and of the Council of 12 July 2023 concerning batteries and waste batteries, amending Directive 2008/98/EC and Regulation (EU) 2019/1020 and repealing Directive 2006/66/EC (OJ L 191, 28.7.2023, pp. 1–117).
See consolidated version.
Regulation (EU) 2023/2859 of the European Parliament and of the Council of 13 December 2023 establishing a European single access point providing centralised access to publicly available information of relevance to financial services, capital markets and sustainability (OJ L, 2023/2859, 20.12.2023).
See consolidated version.
Regulation (EU) 2021/821 of the European Parliament and of the Council of 20 May 2021 setting up a Union regime for the control of exports, brokering, technical assistance, transit and transfer of dual-use items (recast) (OJ L 206, 11.6.2021, pp. 1–461).
See consolidated version.
Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (European Climate Law) (OJ L 243, 9.7.2021, pp. 1–17).
Directive (EU) 2020/1828 of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC (OJ L 409, 4.12.2020, pp. 1–27).
See consolidated version.
Regulation (EU) 2019/125 of the European Parliament and of the Council of 16 January 2019 concerning trade in certain goods which could be used for capital punishment, torture or other cruel, inhuman or degrading treatment or punishment (codification) (OJ L 30, 31.1.2019, pp. 1–57).
See consolidated version.
Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (OJ L 305, 26.11.2019, pp. 17–56).
See consolidated version.
Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (OJ L 317, 9.12.2019, pp. 1–16).
See consolidated version.
Regulation (EU) 2017/821 of the European Parliament and of the Council of 17 May 2017 laying down supply chain due diligence obligations for Union importers of tin, tantalum and tungsten, their ores, and gold originating from conflict-affected and high-risk areas (OJ L 130, 19.5.2017, pp. 1–20).
See consolidated version.
Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (OJ L 157, 15.6.2016, pp. 1–18).
Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (recast) (OJ L 354, 23.12.2016, pp. 37–85).
See consolidated version.
Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, pp. 338–436).
See consolidated version.
Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011, pp. 1–73).
See consolidated version.
Directive 2009/38/EC of the European Parliament and of the Council of 6 May 2009 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees (Recast) (OJ L 122, 16.5.2009, pp. 28–44).
See consolidated version.
Directive 2004/35/EC of the European Parliament and of the Council of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage (OJ L 143, 30.4.2004, pp. 56–75).
See consolidated version.
Directive 2002/14/EC of the European Parliament and of the Council of 11 March 2002 establishing a general framework for informing and consulting employees in the European Community – Joint declaration of the European Parliament, the Council and the Commission on employee representation (OJ L 80, 23.3.2002, pp. 29–34).
See consolidated version.
Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees (OJ L 294, 10.11.2001, pp. 22–32).
Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services (OJ L 18, 21.1.1997, pp. 1–6).
See consolidated version.
