Significantly, the Annex also entails a catch-all provision according to which a ‘violation of a prohibition or right not covered by [the rights listed in the Annex] but included in the human rights agreements listed’ may be brought into the scope of the Proposed Directive. This will be the case where:
(a) the violation ‘directly impairs a legal interest protected in those agreements’; and
(b) ‘provided that the company concerned could have reasonably established the risk of such impairment and any appropriate measures to be taken in order to comply [with its due diligence obligations]’.
Preamble 25 of the Proposed Directive explains that the purpose of this catch-all clause is indeed ‘to ensure a comprehensive coverage of human rights’. In this sense, the Proposed Directive goes beyond any current national (draft or passed) laws on mandatory human rights due diligence within the European Union and beyond.
What is the timeline for this?
The Proposed Directive is currently undergoing the EU legislative process and is not expected to be adopted before 2023. Once adopted, EU Member States will have two years to transpose the Directive into national law. For EU companies falling into Group 2 above, the rules only start to apply two years later than for Group 1.
What next steps should companies be taking?
Companies who fall into one of the above categories should start preparing now for the upcoming legislative changes to ensure you are compliant. Although some changes may be made following the debate in the European Parliament, the principles are likely to remain similar to those outlined.
Please get in touch with Robert Kovacs if you would like to discuss what the Proposed Directive may mean for your company.