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.

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