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European Parliament reaches due diligence law agreement

By Sylvana Lijbaart


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Image illustrating the Corporate Sustainability Reporting Directive (CSRD). Created using an artificial intelligence (AI) tool. Credits: FashionUnited

The European Parliament has reached an agreement on the 'Corporate Sustainability Due Diligence Directive' coming more than two weeks after the agreement first failed when several member states rebelled.

As such, the directive took on a watered down form due to pressure from Germany, Italy and France. EU member states have agreed that only companies with an annual turnover of more than 450 million euros and a minimum of 1,000 staff must comply with the rules, Dutch media platform NOS reported. Earlier, the bill stated that smaller companies with 500 employees and a turnover of 150 million euros also had to comply.

The agreement means that European companies with an annual turnover of 450 million euros and 1,000 employees will have to comply from 2029, while companies with 3,000 employees and a turnover of 900 million euros will be subject to the rules from 2028. Companies with a workforce of 5,000 and a turnover of 1.5 billion euros must comply with the rules from 2027.

European Due Diligence law not thrown in dustbin after all, agreement on weakened directive

On 28 February, a majority was to be formed on European due diligence, but this was in vain. The bill was not accepted by Germany, Italy, Finland and Austria, meaning the text had to be revised, which required new negotiations. The European Parliament was given 14 days to do so.

The EU law, which covers the production chain, aims to hold large companies liable if they profit from child or forced labour in Europe, for example. Large companies must also draw up a plan to ensure that their business model and strategy are compatible with the compliance rules in the Paris Agreement to limit global warming.

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