On 23 February 2022, the European Commission published its much-anticipated draft corporate sustainability and due diligence directive (the "Draft Directive").  The Draft Directive sets out a proposed EU standard for human rights and environmental due diligence ("HREDD") which, importantly, would apply to any non-EU-based company and its subsidiaries  if those group companies have aggregate annual net turnover in the EU of:

  • more than EUR 150 million (Group 1); or
  • more than EUR 40 million with at least 50% of net worldwide turnover generated in a "high-risk" sector which includes textiles, clothing and footwear, agriculture, forestry, fisheries, food & extractives (Group 2).

Notably, the HREDD applies even if a company and its subsidiaries do not have a physical presence in the EU, if the above net turnover threshold is met.

The Draft Directive requires both Group 1 and Group 2 companies to take appropriate measures to identify, and mitigate, actual and potential adverse human rights and environmental impacts arising from their own operations anywhere in the world (not just in the EU) and, where related to their value chains, from their "established business relationships".

Colleagues from our offices throughout the world have prepared briefings which are specific to particular locations, giving insights into related matters in those jurisdictions.

 

For United States companies, please refer to Human Rights and the Environment – What US-based Companies Need to Know about the EU Draft Corporate Sustainability Due Diligence Directive | Perspectives & Events | Mayer Brown.

For Japanese companies, please refer to 日本企業が検討すべきEUコーポレート・サステナビリティ・デューディリジェンス指令案の人権と環境保護の課題について /Human Rights and the Environment – What Japanese Companies Need to Know about the EU Draft Corporate Sustainability Due Diligence Directive | Perspectives & Events | Mayer Brown.

For Asian companies, please refer to Human Rights and the Environment – What Asia-based Companies Need to Know about the EU Draft Corporate Sustainability Due Diligence Directive | Perspectives & Events | Mayer Brown (English version) or   人权与环境——亚洲企业关于欧盟《企业可持续发展尽职调查指令》草案须知 | 观点与活动 | 孖士打 (mayerbrown.com) (Chinese version).

For Brazilian companies, please refer to Human Rights and the Environment – What Brazil-based Companies Need to Know about the EU Draft Corporate Sustainability Due Diligence Directive | Perspectives & Events | Mayer Brown.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe - Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2021. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.