On 13 December, after long hours of late-night ‘trilogue’ negotiations, the European co-legislators finally reached a provisional agreement on the due diligence directive (see EUROPE 13314/12). However, several parts of the text still needed to be validated at a technical level before a final version could be approved.
These discussions are still ongoing. EUROPE has been able to obtain the latest version of the four-column document, which summarises the different positions of the co-legislators.
Numerous points have been modified since the trilogue version of 13 December: the inclusion of the financial sectors, a highly political issue, has been restricted and redefined. The case of compensation for victims has been consolidated and validated, as have the articles governing mandatory impact feedback, respect for the environment by economic operators and transposition into national law.
The case of the financial sector
This was the political point that crystallised the oppositions between the Council and Parliament (see EUROPE 13312/28). The political agreement reached leans in the Council’s direction: the financial sector is largely excluded from the scope of the directive.
In the four-column document, Article 2, which gave Member States the choice of whether or not to include this sector, has been deleted. Article 3, which sets out the definitions, reframes the definition of ‘regulated financial undertaking’ by deleting ‘investee companies’ and ‘asset managers’, which had been included by Parliament.
As a result, Article 8a, which was intended to oblige investors and asset managers to put in place measures to “encourage the companies in which they invest to put an end to the real negative impacts they cause”, has also been deleted.
Finally, according to several sources, a ‘recital’ should be added to mention the possible inclusion of the financial sector in future.
Compensation for victims
Article 22, now entitled ‘Civil liability of companies and right to full compensation’, details the degree of liability of a company found to have breached the obligations of Articles 7 and 8. Victims are entitled to ‘full compensation’ within a maximum of 5 years.
However, the article states that a company “cannot be held liable if the damage was caused solely by its commercial partners in its chain of activities”.
Review and reporting
Article 29, which concerns the ex-post review of the directive’s impact and the future inclusion of financial sectors, has been revised. It states that the Commission must present a report on the need to amend the directive no later than 2 years after its introduction.
Similarly, the Commission is required to present a report to the European Parliament and the Council every 3 years on the implementation of the directive and its effectiveness in achieving its objectives.
National transposition
Finally, Article 30, which sets out the details of the transposition of the directive into national law, gives Member States 2 years to implement it, and between 3 and 5 years to apply it, depending on the type of company concerned.
To see the four-column document, go to https://aeur.eu/f/AGA (Original version in French by Isalia Stieffatre)