The Czech Presidency of the Council of the EU circulated a new compromise text for the Corporate Sustainability Due Diligence Directive on 7 October. In the paper, of which EUROPE has a copy, it proposes several approaches to adapt the scope of the directive.
The European Commission proposed in February that companies with more than 500 employees and a turnover of more than €150 million should have obligations to ensure adverse effects on the environment and human rights (see EUROPE 12897/7). In September, the Czech Presidency already proposed to work on the nature of these obligations (see EUROPE 13029/15).
In this new compromise, it proposes a reflection on the inclusion of subsidiaries and parent companies in the calculation of a company’s turnover and number of employees, which determine whether it is subject to the directive. There is also the question of whether or not to impose the obligations of the text on these subsidiaries.
The Presidency compares the “individual” approach (as proposed by the Commission) with the “consolidated” approach, which takes into account the whole group.
The compromise sets out three options for the obligations of these subsidiaries and parent companies: - first option, the whole group falls under the directive as soon as the group as a whole exceeds the thresholds of the scope; - secondly, parent companies are covered but not subsidiaries, regardless of their size; - or, as a third option, only subsidiaries or parent companies meeting the criteria of the scope of the directive (i.e. independent of each other) are concerned. This corresponds to the Commission’s proposal.
In these three cases of the “consolidated” approach, it is the number of employees and the turnover of the whole group that is taken into account to determine whether it is subject to the directive. This means that the thresholds must be raised. The Presidency proposes to double the figures, but specifies that these thresholds are “indicative only” and will have to be discussed.
Member States will discuss this compromise in the Working Party on Company Law on 18 and 19 October.
See the compromise: https://aeur.eu/f/3MC (Original version in French by Léa Marchal)