“We Europeans will never stand out for our political leadership on the international scene, much less for our military power, because we are heterogeneous and openly show our divisions, but if we are leaders in anything, it is in standardization, which we legislate conscientiously, and our great weapon It is our internal market, probably the most valued by foreign companies”. This was defined last week in Barcelona by MEP Adrián Vázquez, president of the European Parliament's Legal Affairs Committee, which processes the directive on Due Diligence of Companies in Sustainability Matters that must replace the current legislation on the matter.
This legislative proposal, presented by the European Commission on February 23, aims to establish a horizontal framework to promote the contribution of companies operating in the single European market to respect for human rights and the environment in their own operations and, especially, through its value chains, identifying, preventing, mitigating and accounting for adverse effects. Not in vain, according to the reports on which the proposal is based, between 80% and 90% of the environmental damage and human rights violations of these companies occurs in external value chains, outside community jurisdiction .
In line with the European Green Deal and the United Nations Sustainable Development Goals, the new text will complement the Directive on Disclosure of Non-Financial Information approved last year, which already obliges around 12,000 companies to inform the European regulator about the risks, repercussions, measures and environmental, social and human rights policies of its activity after implementing a specific plan on these matters.
The new due diligence goes further, involving subsidiaries, subcontractors and non-EU companies that produce or provide a service in the EU territory. Specifically, European companies with more than 500 employees and a net world turnover of more than 150 million euros in the last financial year or more than 250 employees and a net world turnover of more than 40 million will be required to comply. if at least 50% of that turnover has been generated in sectors considered to be of environmental risk: textiles, agriculture, livestock, mining or related to fossil fuels. In the case of non-community companies, those operating in the EU with the same parameters in terms of turnover in the community space must also comply with the directive.
That the control mechanisms that the European authorities can carry out on the production and supply chains outside their borders are limited is the main question raised by this new law, which appeals to the good faith of the companies and the collaboration of those countries that They have based their economy on the resources and services they offer to the European market, valuing the maturity of all the players.
On the other hand, the fact that subcontracted companies must also carry out due diligence without being obliged to do so due to their characteristics can separate many SMEs and small companies from UTEs and joint ventures in favor of other large companies or their subsidiaries, as Vázquez himself advanced . Issues that must be outlined before the directive is processed for approval, surely during the Spanish presidency of the European Union in the second half of 2023.
The European legal corpus on the matter to which companies must respond is completed with the regulation on Disclosure of Information on Sustainable Finance, the regulation on Green Taxonomy and other directives and regulations of a more specific nature on mining, other polluting sectors, ecosystems where an economic activity, emissions or waste management is carried out.
