A Step Towards Corporate Sustainability—The New Directive on Due Diligence

The Directive (EU) 2024/1760 of 13 June 2024 is an important step towards corporate sustainability, fostering companies’ sustainable and responsible corporate behaviour by introducing human rights and environmental considerations in corporate governance. It will harmonise legal framework in the EU, creating common binding rules on corporate sustainability due diligence. In scope companies shall attend to the adverse impacts on human rights and on the environment arising from their own operations and through their direct and indirect business relationships operations covering the extend of its activities chain. They shall integrate due diligence into their corporate policies and risk management systems and take the adequate and effective measures to identify, assess, prioritise, prevent, mitigate, bring to an end, minimise and remediate those adverse impacts through due diligence procedures, and also be able to monitor and communicate their actions and results, engage with the stakeholders, and deal with notifications and complaints. Companies will have to ensure, through best efforts, that the business model and strategy used are compatible with climate targets. The compliance with these new rules will be enforced by national authorities (orders and penalties) and courts (civil liability based on damage results from non-compliance with due diligence obligations).