Avatar

The EU will impose new sustainability rules on large companies.



Reading time: 2 minutes

The European Commission will present a proposal on Wednesday according to which large companies operating in the European Union will have to check whether suppliers around the world do not use slaves or children as labor and if they comply with environmental standards, according to a draft regulatory act consulted by Reuters and quoted by Agerpres.

The proposal, called “Corporate Sustainability Due Diligence”, will also oblige the boards of EU companies to ensure that their business model and strategy are in line with limiting global warming to 1.5 degrees Celsius, in accordance with the Treaty. of Paris.

But the Commission’s proposal will only become law after lengthy negotiations with the European Parliament and EU member states, which are likely to run for more than a year.

“This law could be a turning point for the impact of corporations on the planet or it could become a failure if big companies lobby to fulfill their wishes,” said the NGO Friends of the Earth Europe.

The EU Executive’s estimates show that the proposal would apply to around 13,000 EU companies. The main criterion will be that the companies have over 500 employees and a net turnover of over 150 million euros. However, the threshold would be lowered to 250 employees and a turnover of 40 million euros for companies in high-impact industries such as clothing, footwear, animals, wood, food and beverages, oil, natural gas, ore metals, building materials, fuels or chemicals.

Even so, about 99% of European companies will not be affected because they do not reach these thresholds.

The law will also apply to around 4,000 non-EU companies operating in the EU bloc. For them, a turnover of € 150 million will have to be achieved in the EU, or if it enters one of the high-impact sectors, a turnover of € 40 million in the EU.

Compliance with these targets will be monitored by Member State governments. Companies that ignore them could be fined.