Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

EU draft law would require firms to check suppliers for human rights, environmental ethics

Economy Feb 21, 2022 03:55PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: EU flags flutter in front of the European Commission headquarters in Brussels, Belgium October 2, 2019. REUTERS/Yves Herman

By Simon Jessop and Jan Strupczewski

BRUSSELS (Reuters) - The European Commission will unveil on Wednesday a proposal to make large companies operating in the European Union check that their suppliers from around the world do not use slave or child labour and that they respect environmental standards, a draft of the law showed.

The proposal, called Corporate Sustainability Due Diligence, will also oblige boards of EU firms to ensure that their business model and strategy align with limiting global warming to 1.5 Celsius, as agreed under the Paris climate treaty.

EU firms will have to make sure that their suppliers are not using forced labour, child labour, of inadequate workplace health and safety, exploitation of workers, or environmental offences like greenhouse gas emissions, pollution, or biodiversity loss and ecosystem degradation.

The Commission proposal, seen by Reuters, will only become EU law after lengthy negotiations with the European Parliament and EU governments that are likely to take more than a year.

"The law could be a true game-changer for corporations’ impact on the planet, or it could be a damp squib if big business lobbies get their wishes," non-governmental organisation Friends of the Earth Europe said in a statement.

The proposal estimates it would apply to 13,000 EU firms. The main criterion would be that a firm employs more than 500 people and has net turnover of more than 150 million euros.

The threshold would be lower -- 250 employees and 40 million turnover -- for firms in high-impact sectors like clothes, shoes, animals, wood, food and beverages, oil, gas, coal, metals and metal ores, construction materials, fuels or chemicals.

Still, that means 99% of Europe's firms would be exempt, as they do not reach these thresholds.

The law would also apply to around 4,000 companies from outside the EU, but operating in the 27-nation bloc.

For them, the 150 million net turnover would have to be generated within the EU, or, if they fall in to the high-impact sector category, 40 million euros of turnover within the EU.

Compliance with these goals would be monitored by EU governments. Companies ignoring them would face fines.

EU firms would also face civil liability if the offence against human rights or the environment was committed by its supplier with whom they have lasting and frequent cooperation.

The private lawsuit against an EU company for misconduct of its supplier would, however, have to show the offence could have been foreseen, prevented, ceased or mitigated with appropriate due diligence measures by the EU firm.

"It will in practice be difficult to prevent all risks through global value chains," the Commision draft said.

"Based on what we know this is a massive step in the right direction in the fight against corporate abuse," said Aurelie Skrobik, Corporate Accountability Campaigner at Global Witness.

"This said, we need to ensure that the law holds companies liable for harms throughout their entire supply chains and that there are no loopholes. There should be no ambiguity in the final text - victims must be able to seek justice through EU courts," she said.

EU draft law would require firms to check suppliers for human rights, environmental ethics
 

Related Articles

Chinese state airlines to buy almost 300 Airbus jets
Chinese state airlines to buy almost 300 Airbus jets By Reuters - Jul 01, 2022

BEIJING/SYDNEY (Reuters) -China's "Big Three" state airlines pledged on Friday to buy a total of almost 300 Airbus jets, the biggest order by Chinese carriers since the start of...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email