On 23 February 2022, the European Commission published a proposal for a Directive on corporate due diligence.
This directive will impose on the largest companies a duty of care regarding the impact on fundamental human rights and on the environment of their activity, that of their subsidiaries and that of their business relations within their value chain (suppliers and customers).
This concerns European companies with more than 500 employees and a turnover of more than EUR 150 million or more than 250 employees and a turnover of more than EUR 40 million if they are active in the textile, wood, agriculture or fisheries sectors. Third country companies are also covered according to adapted criteria.
The draft directive imposes a duty on directors to act in consideration of this impact and specifically to ensure that their business model is consistent with the objective of the Paris Agreement (1.5°C).
SMEs are concerned insofar as they are part of such a value chain, as they will be asked to respect the same principles in their own activity by the companies directly subject to this duty.
The directive could be adopted by the end of 2022. It provides for a transposition period of two years and a period for entry into force of the obligations of two or five years.
