By Adam Turteltaub

On February 22, 2022 the European Commission adopted a proposal for a directive on corporate sustainability due diligence.  In this podcast, George Porter, Knowledge and Training Manager at Ground Truth Intelligence reports that the directive, which is still being negotiated, is both a continuation of past measures and something new. It is designed to unify a great deal of previous regulations and create an ESG framework for both EU-based companies and those doing business in the EU.

The directive covers three key areas: environmental risk, social goals such as modern slavery and child labor, and governance.

The governance portion, importantly, addresses the duty of care and the need to conduct due diligence. It also significantly expands the stakes for organizations. Due diligence of the supply chain continues but organizations will now be responsible not just for how they sourced materials, but also how their products are disposed of.

To back it all up there will be substantial potential penalties, including civil liability and fines up to 5% of global turnover.

So what should organizations expect to do differently or better from a compliance perspective? He recommends preparing for a greatly enhanced auditing and monitoring program. Action plans will be needed for suppliers who need to improve their efforts. On a continuous basis there will be a need to check that these plans are being followed and attestations are not just tick boxes.

Listen in to learn more about how this directive will likely lead to substantial changes in the ways in which organizations do business and what compliance teams need to start preparing for.