EU PARLIAMENT PASSES AMENDMENTS TO DUE DILIGENCE DIRECTIVE NOVEMBER 3, 2025

 

The European Union moves to reduce the burden of the Due Diligence Directive and sharply reduce the ability of Member States to enact tougher national laws.

Part One

After much controversy, the EU Parliament, reflecting the results of successive elections that brought in more right-wing members, passed a set of new amendments to the Corporate Sustainability Due Diligence Directive.

text of relevant amendments to Directive (EU) 2024/1760 (CSDDD):

1. Article 2 - Scope and Definitions:
• Amendment 79: Replaces the employee and turnover thresholds for company applicability, increasing from >1,000 employees and >€450 million turnover to >5,000 employees and >€1.5 billion net worldwide turnover.
• Amendment 80: Updates the EU turnover threshold for parent undertakings from >€450 million to >€1.5 billion.
• Amendment 82: Redefines "stakeholders" to include individuals or communities affected by adverse human rights and environmental impacts, emphasizing legitimate representatives.
• Amendment 83: Introduces a new definition of "reasonably available information" as data obtainable without contacting business partners.
2. Article 4 - Harmonization of Laws:
• Amendment 85: Prohibits Member States from introducing diverging provisions on human rights and environmental due diligence, extending the scope to Articles 6-16.
• Amendment 86: Deletes provisions allowing more stringent national measures, limiting divergences to specific objectives or fields.
3. Article 6 - New Paragraph:
• Amendment 87: Adds a provision allowing a company two years to integrate a newly acquired company's processes into its due diligence policy if the acquired entity was outside the CSDDD scope.
4. Article 8 - Identifying and Assessing Adverse Impacts:
• Amendment 88: Replaces the mapping and assessment process with a "scoping" based on reasonably available information, prioritizing direct business partners and avoiding unnecessary information requests.
• Amendment 89: Deletes requirements for assessing indirect business partners and contractual assurances.
• Amendment 90: Limits information use to reasonably available sources, prohibiting requests to business partners unless necessary.
• Amendment 91: Restricts information requests to business partners with <5,000 employees to last-resort scenarios, emphasizing proportionality.
• Amendment 92: Allows companies to use independent reports and other resources for assessments, permitting explanations for unobtainable information without penalties.
5. Article 9 - Prioritisation of Adverse Impacts:
• Amendment 93: Permits prioritization of severe and likely impacts, requiring subsequent addressing of less severe ones within a reasonable time, with no penalties for unaddressed less significant impacts.
6. Article 10 - Prevention of Adverse Impacts:
• Amendment 94: Introduces temporary suspension of business relationships as a leverage tool.
• Amendment 95: Clarifies that continuing engagement with a business partner does not trigger liability if the prevention plan is expected to succeed.
• Amendment 96: Requires stakeholder consultation before suspending relationships, assessing alternatives and potential severe impacts.
• Amendment 97: Allows suspension or termination of business relationships in contracts, excluding legally mandated ones.
7. Article 11 - Mitigation of Adverse Impacts:
• Amendment 98: Shifts focus from prevention to ending or minimizing actual adverse impacts.
• Amendment 99: Replaces "prevention action plan" with "corrective action plan."
• Amendment 100: Introduces temporary suspension as a leverage tool.
• Amendment 101: Specifies no penalties or liability if the corrective plan is expected to succeed.
• Amendment 102: Requires stakeholder consultation and assessment of alternatives before suspension.
• Amendment 103: Permits suspension or termination of relationships.
• Amendment 104: Mandates monitoring and periodic reassessment if suspension is not pursued.
8. Article 15 - Effectiveness of Measures:
• Amendment 105: Reduces the reassessment frequency from every 5 years to every 4 years.
9. Article 19 - Guidelines:
• Amendment 106: Consolidates guideline publication deadlines to 26 July 2026 for multiple categories.
10. Article 22 - Transition Plan for Climate Change Mitigation:
• Amendment 108: Revises the transition plan to use "reasonable efforts" instead of "best efforts," aligning with Paris Agreement goals without specific temperature targets.
• Amendment 109: Defines "reasonable efforts" as proportionate actions, making the obligation one of means, not results.
• Amendment 110: Simplifies the transition plan structure, focusing on objectives rather than time-bound targets, and reducing detail on investments and governance.
• Amendment 111: Requires annual updates with a brief progress description.
11. Article 25 - Supervisory Authorities:
• Amendment 112: Enhances supervisory roles, including advice on transition plans, considering complexities like emission estimates and technology availability.
12. Article 27 - Penalties:
• Amendment 113: Initiates amendments to penalty provisions (specific changes not detailed in the provided content).

        These amendments aim to streamline compliance while maintaining effectiveness in addressing sustainability risks. It requires a risk management program in covered companies that uses "desk audits' to determine the risk of using various vendors (this is crucial for waste vendors). IT does not require onsite audits or reviews, but the information necessary to meet the standards for corrective actions (required) and preventative actions, like termination (sometimes advisable) will require onsite reviews.

         Many more details coming in Part Two.

Check out my original discussion of problems with the old version of the Directive here. Some are addressed by the amendments.

Randy Mott JD