EU moves to stop environmental damage, human rights abuse

The European Parliament on Thursday approved a proposed law that would make large companies with significant revenue from Europe liable for environmental damage and human rights abuses.

Under the directive, which will be reconciled with measures drafted by other EU bodies and could come into force next year, EU-based companies with more than 250 employees and multinational corporations with more than €150 million ($160.5 million) in turnover, of which at least 40% is generated within the EU will have to comply with the Corporate Sustainability Due Diligence Directive.

Companies could be required to “identify, and where necessary prevent, end or mitigate the negative impact of their activities on human rights and the environment such as on child labor, slavery, labor exploitation, pollution, environmental degradation and biodiversity loss,” according to a statement by the parliament.

Companies will also have to monitor and assess the actions of organizations in their supply chains.

Fines of at least 5% of a company’s net worldwide turnover could be applied if they fail to comply.

The directive has recently been extended to include a wider range of firms by sector and size and European business groups, such as the Brussels-based Confederation of European Business, have expressed concerns about the potential expansion of corporate and individual liability following the implementation of the directive.

Under the directive companies, would also have to implement a transition plan to limit global warming to 1.5 degrees Celsius.

Non-EU companies that fail to comply with the rules will be banned from public procurement in the EU, the statement said.

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