In a critical vote in today’s plenary session, the Socialists and Democrats led a progressive majority for binding new rules on making sure businesses behave responsibly, both inside and outside the EU.

After three years of negotiations, Parliament has reached a common position on what responsible business means in the Corporate Sustainability Due Diligence Directive. Companies will be required to identify, prevent and correct any damage caused – such as environmental harm or human rights abuses – throughout the entire value chain of their operations, from design and production to sales and distribution. There will be sanctions on companies that fail to comply with the rules – such as possible penalties of up to 5% of a company's turnover – and CEOs should take personal responsibility for due diligence, with direct links to remuneration.  

With a negotiating mandate now agreed, S&D MEP Lara Wolters will lead the European Parliament’s negotiations with the Council as a part of the trilogue talks.

Lara Wolters, European Parliament rapporteur for due diligence, said:

“Over the years, irresponsible business practices have cost thousands of lives and destroyed thousands of livelihoods. Thousands of children left parentless and thousands of families left homeless, all in the name of corporate greed.

“As the world’s largest single market, the EU has the power to fix the damaged chain. Greedy companies should no longer be able to turn a blind eye to the damage they do to the environment and human rights, no matter where it takes place in their value chain; either in or outside the EU.

“Today’s vote is a landmark moment. It is a commitment to reach an agreement with EU governments on binding rules for responsible business conduct. Now, our job is to deliver on Parliament’s ambition.

“The conservatives did their utmost to dilute and undermine our work. Despite the unity built among the political groups in the legal affairs committee, the EPP has played irresponsible politics to undo the hard-fought consensus we had reached in the committee vote.

“Instead of voting to protect people and planet, the EPP Group today showed that their real priority is protecting the profits of their boardroom benefactors.”

Notes to editors – Main achievements for the S&D Group

• Building on the Commission’s proposals, the Parliament is more ambitious in its scope. All companies with more than 250 employees and a turnover of at least €40 million will be covered. The Commission's proposal covered companies with 500 employees and a turnover of €150 million.
• The Parliament calls for companies to make their value chains climate neutral by 2050, and they should submit climate transition plans in line with the goals of the Paris Agreement, including concrete targets and measures that will lead their value chains to climate neutrality by 2050 in five-year steps starting in 2030.
• Victims of harm have better access to justice: civil society organisations and trade unions can represent victims in court; courts can order the disclosure of evidence by companies; courts can issue injunctions to stop harm.
• Sanctions on companies failing to comply with the rules could include: penalties of up to 5% of annual turnover; ‘naming and shaming’ by authorities; removal of products from the EU market; impact on a company’s consideration in public procurement processes.
• CEOs should have a duty of care for due diligence and companies with over 1000 employees should link remuneration to due diligence.
• Companies will be required to engage with affected stakeholders and their representatives, such as trade unions, throughout the due diligence process. If a company does not have sufficient information about potential harm, it should reach out to civil society organisations for relevant information.