{"id":31320,"date":"2024-11-07T13:33:33","date_gmt":"2024-11-07T12:33:33","guid":{"rendered":"https:\/\/www.laragon.es\/the-eurd-2024-1760-on-corporate-sustainability-due-diligence-defines-a-new-global-framework-for-corporate-responsibility\/"},"modified":"2024-11-07T15:02:44","modified_gmt":"2024-11-07T14:02:44","slug":"the-eurd-2024-1760-on-corporate-sustainability-due-diligence-defines-a-new-global-framework-for-corporate-responsibility","status":"publish","type":"post","link":"https:\/\/www.laragon.es\/en\/the-eurd-2024-1760-on-corporate-sustainability-due-diligence-defines-a-new-global-framework-for-corporate-responsibility\/","title":{"rendered":"The EURD 2024\/1760 on corporate sustainability due diligence defines a new global framework for corporate responsibility"},"content":{"rendered":"\n

With the entry into force of the EURD 2024\/1760 Directive in June this year<\/a>, large companies operating in Europe are already facing a new regulatory framework that imposes strict human rights and environmental due diligence obligations. This directive reinforces the EU’s commitment to sustainability and fundamental rights, requiring companies not only to reduce their environmental impact, but also to mitigate adverse human rights impacts, both in their operations and in their complex international supply chains. <\/p>\n\n

This regulation, based on the UN Guiding Principles on Business and Human Rights, becomes a tool to achieve the ambitious goals of the European Green Pact, which aims for climate neutrality by 2050. According to the directive, companies will have to integrate sustainability policies at all levels, ensuring that business decisions consider not only profitability, but also social and environmental well-being. <\/p>\n\n

Large companies in the spotlight<\/strong><\/h2>\n\n

The directive has a clear focus on large companies, particularly those with more than 1,000 employees and generating an annual turnover of more than 450 million euros. These companies will have to implement a comprehensive six-step due diligence process: <\/p>\n\n

– Integrating due diligence into policies and management systems:<\/strong> The first step involves developing clear company policies that address due diligence obligations and creating management systems to ensure their implementation. Companies should define codes of conduct and internal standards to ensure that their operations and those of their partners comply with sustainability and human rights requirements. <\/p>\n\n

– Identification and assessment of adverse effects: <\/strong>In this step, companies should identify and assess potential adverse impacts related to their operations and supply chain. This analysis includes not only the company’s own activities, but also those of its suppliers and subcontractors, locally and internationally. Tools such as audits or sectoral risk assessments help to detect potential human rights violations or environmental risks. <\/p>\n\n

– Prevention, interruption or minimisation of adverse effects:<\/strong> Once risks have been identified, companies must implement measures to prevent or mitigate those impacts. This may include modifying contracts with suppliers, adopting new cleaner technologies or improving working conditions. Minimising adverse effects should be an ongoing priority, especially in sectors such as manufacturing or the production of sensitive materials. <\/p>\n\n

– Monitoring and evaluating the effectiveness of measures<\/strong>: Companies should not only implement preventive measures, but also monitor their effectiveness on a regular basis. This involves tracking key performance indicators, conducting internal audits and reviewing processes to adapt to new regulations or circumstances. This approach allows organisations to adjust their strategies to maximise their positive impact and minimise risks. <\/p>\n\n

– Transparent communication: <\/strong>Transparency is essential throughout the due diligence process. Companies should inform their stakeholders (customers, investors, employees, and the general public) about the measures they have taken and the results of these actions. Public sustainability reporting, describing due diligence policies and practices, is a key tool for building trust and credibility. <\/p>\n\n

– Remediation:<\/strong> Where adverse impacts cannot be completely avoided, companies should provide effective solutions to remedy them. This includes accessible grievance mechanisms for affected people, such as employees or communities, to report problems. Companies need to be prepared to respond quickly and fairly, offering compensation or remedial action where necessary. <\/p>\n\n

This means that multinationals operating in Europe, even if they are based outside the Union, must comply with the requirements if their turnover on the continent is significant.<\/p>\n\n

Medium-large companies with more than 250 employees and a turnover between EUR 40 and 450 million, <\/strong>although smaller in size, also fall under the umbrella of the Directive, but with a gradual implementation. It is expected that by 2027<\/strong>, these companies will be aligned with the due diligence requirements, and from that date onwards they will have to comply with all stages of the sustainability process. <\/p>\n\n

SMES<\/strong><\/h2>\n\n

On the other hand, 99.8% of the European business fabric is made up of SMEs, which employ approximately 67% of the workforce in the European Union. Many of these small and medium-sized enterprises operate as suppliers or business partners of large corporations. The Directive obliges large companies to apply the six stages of due diligence not only on their own operations, but also on those of their suppliers and business partners. This includes thousands of SMEs involved in transnational supply chains or working in critical sectors such as manufacturing, technology, transport, among others. <\/p>\n\n

Suppliers will be under scrutiny to ensure that there are no human rights violations, such as child labour, exploitative labour or unhealthy conditions, and that they respect environmental standards, such as reducing CO2 emissions or proper waste management.<\/p>\n\n

SME support mechanisms<\/strong><\/h2>\n\n

Aware of the challenges that this regulation may pose for SMEs, the Directive foresees specific support mechanisms to ensure that these companies can comply with the new requirements without jeopardising their economic viability.<\/p>\n\n

    \n
  1. Financial support:<\/strong>
    1. Low-interest loans or grants: <\/strong>Large companies could partially finance the changes that SMEs need to implement, such as the adoption of cleaner technology or the implementation of certified environmental management systems (ISO 14001, for example).<\/li><\/ol>\n
        \n
      1. Guarantees of continuous supply: <\/strong>To compensate for adaptation costs, large companies could offer long-term contracts that ensure continuity of business relationships, allowing SMEs to plan investments with greater certainty.<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n\n