After intense negotiations, EU policymakers reached a historical political agreement on the first-ever European Due Diligence Directive in the early morning of 14 December. The EU has thus become the first region in the world with binding rules that apply across borders, requiring large companies to ensure that environmental standards as well as human, worker and trade union rights are respected all along their global supply chains.

The political agreement now needs to be translated into the technical terms of a Directive, which will then be presented to the European Parliament and the Council for formal adoption. Once formally adopted, the new Directive will be published in the Official Journal of the EU, which is expected in the first quarter of 2024.

The political agreement is the outcome of tough discussions, as there was particularly strong opposition to mandatory rules applying to all companies in all sectors and at all levels of the supply chain. The result is therefore a compromise with important wins but also significant weaknesses. Large companies operating in the EU single market, as well as smaller companies in high-risk sectors, will now be obliged to identify, prevent and correct any (potential) harm that their operations and those of their suppliers could pose on people and the planet. The obligation for companies to adopt a climate transition plan – which is already foreseen in the Directive on Sustainable Reporting – has been confirmed with an additional layer of control, as national authorities will monitor its publication and compliance. There will however be no civil liability for non-compliance with decarbonisation plans. Another major drawback is the exclusion of the financial sector from carrying out due diligence on their clients.

A more detailed analysis of the Due Diligence Directive will follow the publication of the final text. Though not as ambitious as it should have been, the EU’s political deal marks the first steps towards making responsible business conduct mandatory in our societies.

“IndustriAll Europe welcomes the news of an imminent EU directive on due diligence. Running a business responsibly in the European single market will no longer be an option, it will be an obligation, says Judith Kirton-Darling, industriAll Europe Acting Joint General Secretary.

“We want this future directive to deliver concrete changes for workers and trade unions across the globe. We will therefore be watching very closely how the new Due Diligence Directive will be worded, transposed in Member States and implemented in companies. The guidelines and resources for capacity building that the European Commission is tasked to develop will be of crucial importance. We insist that trade unions are fully involved at all stages. We are only at the beginning of a process in which trade unions active in multinational companies will undoubtedly play their full role”.