DEVE OPINION
ON
THE PROPOSAL FOR A DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
AMENDING DIRECTIVE 2013/34/EU, DIRECTIVE 2004/109/EC, DIRECTIVE 2006/43/EC AND
REGULATION (EU) NO 537/2014, AS REGARDS CORPORATE SUSTAINABILITY REPORTING.
Rapporteur: Pierfrancesco Majorino
COMPROMISE AMENDMENTS
21.02.2022
COMPROMISE 1
Proposal for a directive
Article 1 – paragraph 1 – point 1
Directive 2013/34/EU
Article 21– paragraph 3. introductory part
AM 188 (Renew) AM 189 (Left)
3.
The coordination measures prescribed by Articles 19a, 19d, 29a, 30 and 33, Article
34(1), second subparagraph, point (aa), paragraphs 2 and 3 of Article 34, and Article 51 of this
Directive shall also apply to the laws, regulations and administrative provisions of the
Member States relating to the following undertakings
, provided that they meet the criteria
laid down in Article19a(1), regardless of their legal form:
COMPROMISE 2
Proposal for a directive
Article 1 – paragraph 1 – point 2
Directive 2013/34/EU
Article 2 – point 17
AM 25, 26, 27, 28 (S&D), AM 193, 196, 201, 202 (Renew), AM 194 (EPP), 197, 199, 203
(Greens), 198, 200, 204 (Left)
(2)
in Article 2, the following points (17) to (20) are added:
17)
‘‘sustainability matters’ means sustainability factors as defined in Article 2, point (24)
of Regulation (EU) 2019/2088 of the European Parliament and of the Council*4,
namely
respect for environmental, social and employee issues, human rights,
the respect for the
rule of law and good governance systems of the country, region or territory where the
undertaking or its supply chain operates and governance factors.
(18) ‘sustainability reporting’ means reporting information related to sustainability matters in
accordance with Articles 19a, 19d and 29a of this Directive;
1
(19)
’intangibles’ means non-physical resources that contribute to the undertaking’s value
creation
such as the intel ectual, human, and social and relationship capital;
(20)a ‘high-risk economic activity sector’ means a sector of economic activity that is
particularly exposed to sustainability risks or is
likely to have actual or potential severe
impacts on the environment, human rights and the rule of law and good governance
systems of countries, regions and territories where the undertaking or its supply chains
operate and defined by the Commission with delegated acts.
(20)b 'high-risk undertaking' means an undertaking active in one or more of the high- risk
economic activity sectors defined by the Commission with delegated acts ;
(20)c ‘sustainability strategy’ means the undertaking’s plans of action to achieve long
term SDGs and targets in line with the UN 2030 Agenda, the Paris Agreement and other
relevant international commitments, as wel as Union policies and legislation. It includes
corporate due diligence processes aimed at identifying and managing the potential or
actual adverse risks and impacts linked to sustainability matters.
(20)d ‘targets’ means measurable, specific, time-bound and, when applicable, science-
based indicators
(20)e ‘Specific science-based measurable targets’ means indicators which take into
account the UN programme ‘Transforming our world: the 2030 Agenda for Sustainable
Development’, reports and analyses of the Organisation for Economic Cooperation and
Development (OECD) on the Sustainable Development Goals and the EU’s ‘Europe 2020
strategy’.
(20)f 'Severe impacts' are adverse impacts on people, their fundamental human rights and
the environment and on the rule of law and governance systems of the country, region or
territory where the undertaking or its supply and value chain operate connected to the
undertaking's value chain by its own operations, its products and services, its business
relationships, its subsidiaries, and its supply chain, based on the gravity of the impact on
the sustainability matter, the number of individuals that are or could be affected, or the
scale of the damage to the environment; the ease with which the harm could be remediated,
restoring the environment or affected people to their prior state; and which cause the
greatest harm relative to other impacts the undertaking has identified.
COMPROMISE 3
Article 1-paragraph1.point 3.
-Article 19a-paragraph1
AM 29, 30 (S&D), AM 205 (Renew), AM 206 (EPP), AM 207 (Left)
1. Large undertakings,
public-interest entities and al undertakings referred to in Article 3(7)
which are governed by the law of a third country and are not established in the territory of
the Union when they operate in the internal market sel ing goods or providing services
under the arrangements set out in Article 19b(1), those entities registered as foundations,
partnerships or similar structures fulfil ing the criteria for undertaking and, as of 1 January
2
2026, small and medium-sized undertakings which are undertakings referred to in Article 2,
point (1), point (a),
and smal and medium sized undertakings referred to in Article 3(2) and
(3) which operate in one or more of the high-risk economic activity sectors defined by the
Commission by means of delegated act shall include in the management report information
necessary to understand the undertaking’s impacts on sustainability matters, and information
necessary to understand how sustainability matters affect the undertaking’s development,
performance and position and that of its
supply and value chain.
COMPROMISE 4
Article 1-paragraph1.point 3.
-Article 19a-paragraph 2-subparagrpah 1. point 1 a-
AMs 31, 32, 33, 34, 35, 36 (S&D), 208, 210, 211, 222 (EPP), AM 209, 212, 216, 219, 221(Renew)
213, 214, 217, 220 (Left)
2.
The information referred to in paragraph 1 shall contain in particular:
(a)
a brief description of the undertaking's business model and strategy
and its
implementation, including:
(i)a
a description of the adverse impacts on and risks for sustainability matters
identified by the undertaking, and in particular, those that are likely to take place in
their supply and value chains, including in developing countries. Transparency shal be
required with respect to products, services and assets generated;
(i)
the resilience of the undertaking's business model and strategy to risks related
to sustainability matters
and climate change;
(ii)
the opportunities
and risks for the undertaking related to sustainability
matters
and the transition to a carbon neutral economy;
(iii)
the plans of the undertaking to ensure that its business model and strategy are
compatible with the transition to a sustainable economy and with the limiting of global
warming to 1.5 °C in line with the Paris Agreement;
(i i)a
how the business model and strategies contribute to the implementation of
the UN 2030 Agenda for Sustainable development in the developing countries where
the undertaking or its supply and value chains operate;
(i i)b the plans of the undertaking to ensure that its business model and strategy respect
workers’ rights and potentially affected communities;
(iv)
how the undertaking’s business model and strategy take account of the
interests
and needs of the undertaking’s stakeholders
, and
risk management and of
the
principal actual or potential adverse impacts of the undertaking on sustainability
matters
and climate change along the entire supply and value chain;
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(v)
how the undertaking’s
sustainability strategy has been implemented
and the
results achieved with regard to sustainability matters and
climate change and related
targets , in connection with principal risks, opportunities and severe impacts.
COMPROMISE 5
Article 1-paragraph1.point 3.
-Article 19a-paragraph 2-subparagraph 1. point b
AMs 37 (S&D), AM 223 (Greens); AM 224 (Renew), AM 225, 226(Left);
(b)
a description of the
time-bound, short, medium and long-term targets related to
sustainability matters set by the undertaking
to address risks, opportunities and impacts of
its activities whether such targets are science-based alongside corresponding evidence, and
of the progress the undertaking has made towards achieving those targets
including:
(i) a clearly defined path to reach the targets and corresponding timeframes
(i ) the methods, main data and rationale used in setting these targets which must
uphold the principle of ‘do no significant harm’ within the meaning of Article 17 of
Regulation(EU) 2020/852;
(i i) targets to be reviewed by independent scientific reviewers, and made available
to the general public including information on how and to what extent the
undertaking is aligned with the broader strategy that qualify as 'environmental y
sustainable' pursuant to Regulation (EU) 2020/852;
(iv) where relevant an analysis of the lack of progress in relation to those targets
and the reasons explaining the impossibility or failure to reach intermediary and
final targets;
vi) The actions to be taken to successful y achieve those targets including corrective
measures and a description of the investments, actions and policies adopted.
COMPROMISE 6
Article 1-paragraph1.point 3.
-Article 19a-paragraph 2-subparagraph 1. point c
AMs 38 (S&D), AM 227 (Greens); AM 228 (Left), AM 229 (Renew);
(c)
a description of the role
and the composition of the administrative, management and
supervisory bodies with regard to sustainability matters
, including:
(i) the extent to which these bodies shal take into consideration sustainability
matters and, where appropriate, the resources at their disposal in order to do so;
4
(i ) the consistency of the remuneration schemes of their members with the
company's sustainability strategy;
(i i) engagements in the due diligence process implemented with regard to
sustainability matters and on adverse effects as wel as the involvement and
exchanges with the different stakeholders affected by the identified impacts;
(iv) engagements in the analysis of risks and opportunities for the undertaking with
regard to sustainability matters;
(v) the process set up to oversee the implementation of the undertaking’s strategy
related to sustainability matters;
(vi) expertise on sustainability matters of the members of the administrative,
management and supervisory bodies and consultation of external experts;
(vi) the matters addressed by these bodies during the reporting period;
COMPROMISE 7
Article 1-paragraph1.point 3.
-Article 19a-paragraph 2-subparagraph 1. point e, f and g
AM 39, 40, 41, 42 (S&D), AM 236 (Greens), AM 232, 237 (Renew), AM 233, 238, 239, 241 (Left)
AM 243 (EPP)
(e)
a description of:
(i) the due diligence process implemented with regard to sustainability matters
in
particular regarding human rights, social rights, rule of law and good governance
systems and environmental due diligence along the entire supply and value chain, the
Charter of Fundamental Rights of the European Union and the international and
regional human rights conventions, guidelines and standards such as the UN Guiding
Principles on Business and Human Rights, the OECD Due Diligence Guidance for
Responsible Business Conduct, the International Labour Organisation (ILO)
Declaration on Fundamental Principles and Rights at Work, the ILO fundamental
conventions.
The reporting requirements as regards due diligence should be based upon the
upcoming legislation on corporate due diligence.
The description of the corporate due diligence process shal include as a minimum the
fol owing information:
- identification, assessment and prioritisation of actual and potential adverse
impacts,
- prevention, mitigation and cessation of such impacts,
- tracking implementation and their results,
- identification and engagement of the adversely affected people, and
5
- alert mechanisms and how complaints and grievances are received and managed.
(ii) the actual or potential adverse impacts connected with the undertaking’s
supply and
value chain
, in particular as identified through the due diligence process, including its
own operations, its products and services, its business relationships and its supply chain
,
including with regard to:
- al people affected by those impacts with particular attention to persons who
frequently face discrimination or are in a vulnerable situation, such as women,
children, minorities, indigenous people, persons experiencing poverty or social
exclusion, LGBTIQ persons, persons with disabilities;
- the negative or positive effect of the undertaking’s business policies, practices and
decisions on the identified issues, including of the undertaking’s purchasing policies
and practices;
(iii)
any actions taken, and the result of such actions, to
identify, assess, prevent,
mitigate,
cease, monitor, communicate, account for, address and remediate actual or
potential adverse impacts;
(f)
a description of the risks to the undertaking related to sustainability matters, including
the undertaking’s principal dependencies on such matters, and how the undertaking manages
those risks;
(g)
indicators,
including those relating to performance, impact and results, relevant to
the disclosures referred to in points (a) to (f),
provided by the Commission by means of an
delegated act.
Undertakings shall also disclose information on intangibles, including information on
intellectual, human, and social and relationship capital.
Undertakings shall report the process carried out to identify the information that they have
included in the management report in accordance with paragraph 1 and in this process, they
shall take account of short, medium and long-term horizons.
COMPROMISE 8
Article 1-paragraph1.point 3.
-Article 19a-paragraph 3
AM 43, 44, 45 (S&D); AM 248 (Left), AM 249 (Greens), AM 250 (Renew)
3. The information referred to in paragraphs 1 and 2 shall contain forward-looking and
retrospective information, and qualitative and quantitative information.
It shal be clear,
accessible, accurate, concise, and reliable.
The information referred to in paragraphs 1 and 2 shall contain
al information about the
undertaking’s value chain, including the undertaking’s own operations,
workforce,
6
investments, assets, products and services, its business relationships and its supply chain ,
in
particular in high-risk economic activity sectors that is useful in order to understand the
impacts and risks related to sustainability matters for the undertaking.
COMPROMISE 9
Article 1-paragraph1.point 3.
-Article 19a-paragraph 6 a (new)
AM 47 (S&D); 192, 412 (Greens), AM 256 (Renew) 268 (Left)
The Commission shal be empowered to adopt delegated acts in accordance with Article 49
to establish and update a list of high-risk high-risk economic activity sectors set out in
Article19a. In defining that list the Commission shal take into account the work of the
Platform on Sustainable Finance established in accordance with Article 20 of Regulation
(EU) 2020/852 and the OECD Due Diligence Guidance for Responsible Business Conduct,
including for mining, extractive industries, agriculture, clothing and footwear, finance and
international shipping, as wel as other relevant UN bodies’ guidance on specific sectors.
The list of sectors shal take account of the need to be consistent with the NACE
classification.
COMPROMISE 10
Article 1-paragraph1.point 3.
-Article 19a- paragraph 7.
AM 48 (S&D), AM 257, 261, 264, 267 (Renew), AM 258, 260, 262, 263, 265, 266(Left)
7.
The consolidated management report of the parent undertaking shall be published in
accordance with Article 30, in the manner prescribed by the law of the Member State by
which the undertaking
which meets the requirements referred to paragraphs 1 to 4 is
governed.
The Member State
where the undertaking
which meets the requirements referred to in
paragraphs 1 to 4 is governed, may require that the consolidated management report
of a
parent undertaking referred is published in an official language of the Member State or in a
language customary in the sphere of international.
The management report of
a subsidiary of a parent undertaking
subjected to the obligations
set out in paragraphs 1 to 4 shall contain the name and registered office of the parent
undertaking that reports information at group level in accordance with Articles 29 and 29a,
or in a manner that may be considered equivalent, in accordance with the implementing
measures adopted pursuant to Article 23(4), point (i) of Directive 2004/109/EC, to the manner
required by the sustainability reporting standards referred to in Article 19b;
7
COMPROMISE 11
Article 1-paragraph1.point 3.
Article 19.b. paragraph 1
AM 49 (S&D); 270, 271, 272, 273, 283 (EPP); AM, 274, 275, 281 (Left); 276, 278, 279,
280282(Renew)
1.
The Commission shall adopt delegated acts in accordance with Article 49 to provide
for sustainability reporting standards. Those sustainability reporting standards shall specify
the information that undertakings are to report in accordance with Articles 19a and 29a and,
shall specify the structure,
format and calculation in which that information shall be
reported. In particular:
(a)
within one year and a half of the entry into force of this Directive the Commission
shall adopt delegated acts specifying the information that undertakings are to report in
accordance with paragraphs 1 and 2 of Article 19a, and at least specifying information
corresponding to the needs of financial market participants subject to the disclosure
obligations of Regulation (EU) 2019/2088.
(b)
within two years of the entry into force of this Directive the Commission shall adopt
delegated acts specifying:
(i)
complementary information that undertakings shall report with regard to the
sustainability matters and reporting areas listed in Article 19a(2),
in a precise and
accessible form;;
(i)a key targets against which al undertakings must report on sustainability
matters;
ii)
information that undertakings shall report that is specific to the sector in which
they operate.
Standards for undertakings operating in high risks sectors shal be
developed as a priority;
(i )a
the specific measurable objectives based on scientific evidence set out in
Article 2, point (20b);
(i )b
the criteria and implementing information rules for sustainability reporting
for smal and medium-sized undertakings referred to in Article 19(a)1;
(i )c
the criteria and implementing rules for sustainability reporting for
undertakings referred to in Article 3(7), which are governed by the law of a third
country and are not established in the territory of the Union when they operate in
the internal market sel ing goods or providing services;
The Commission shall, at least every
five years after its date of application, review any
delegated act adopted pursuant to this Article taking into consideration the technical advice
of the European Financial Reporting Advisory Group (EFRAG)
provided that such advice has
8
been developed by an independent way while
ensuring the meaningful participation of al
relevant stakeholders in the process . Where necessary
, the European Commission shall
amend such delegated act to take into account relevant developments, including
developments with regard to international standards.
In addition, the Commission shal
carry out a one-off review of the aforementioned delegated acts fol owing the adoption of
the upcoming legislation on corporate due diligence.
COMPROMISE 12
Article 1-paragraph1.point 3.
Article 19.b. paragrah 2. subparagraph 1 - point a)
AM 50 (S&D) ; AM 284, 287, 288, 289, 290, 292, 294, 296, 298, 300, 302, 303(Left); 295
(Greens)
The sustainability reporting standards referred to in paragraph 1 shall require that the
information to be reported is understandable,
concise, accessible, accurate, relevant,
representative, verifiable
, reliable, comparable, and is represented in a faithful manner.
When applicable, the information shal be science-based and measurable.
The sustainable reporting standards referred to in paragraph 1 shal require undertakings
to disclose al contextual information that is necessary to understand the information
reported
The sustainability reporting standards shall, taking into account the subject matter of a
particular standard:
(a) specify the information that undertakings are to disclose about environmental
factors, including information about:
(i)
climate change mitigation
including reduction of greenhouse
gas emissions and substantiated explanation on the alignment of the
undertaking’s business model and strategy with the goal of limiting of
global warming to 1.5 °C;
(ii)
climate change adaptation,
including identification of risks
under different climate scenarios, targets and detailed transition plans
to address these risks;
(iii)
the sustainable use and protection of water
, soil, land and
marine resources
, including information on the changes in quality or
quantity of those resources and the fair access to those resources by
other users and local stakeholders;
(iv)
targets to limit the use of resource and application of circular
economy;
(v)
pollution
of any kind, including plastic pol ution, water, air and
soil pol ution, diffuse pol ution;
(vi)
biodiversity and ecosystems
including targets to reduce
deforestation and impacts on wildlife;
(vi a)
animal welfare, including living and transport conditions;
9
COMPROMISE 13
Article 1-paragraph1.point 3.
-Article 19.b. paragraph 2. sub-paragraph 2. point b.
AM 51, 52, 53, 54, 55 (S&D); AM 305,307, 308, 311, 313, 314 (Left); AM 309 (EPP); AM 310
(Greens); 312 (Renew)
(b)
specify the information that undertakings are to disclose about social factors,
including information about:
i) the
undertaking’s workforce, including country-by-country data on:
- workforce composition and diversity with respect to vulnerable groups, gender
equality, and use of contingent labour,
- equal opportunities for all, including gender equality and equal pay for equal work
or work of equal value as wel as pay transparency,
- wage levels disaggregated per gender, per quartiles, per category of
occupation, and comparison with applicable minimum wage levels and living
wages;
- freedom of association, col ective bargaining coverage, social dialogue
practices, and consultation, information and involvement of workers,
- working conditions, including secure employment, work-life balance and a
healthy, safe and wel - adapted work environment, including data on workplace
accidents and safety programmes ,in line with the Council Directive 89/391
- employment and inclusion of people with disabilities,
- training and skil s development broken down by hours, gender and category of
workers and the average expenditure on training per worker
- steps taken to reduce inequalities
- diversity in al levels of management, in particular women on boards, and the
workforce broken down by gender, age, ethnicity and possible other relevant
factors.
(i )
workers in the value chain, including:
- sector-specific data on workers in the value chains associated with a high
likelihood of actual or potential adverse impacts, corresponding to the data
concerning the undertaking’s workforce;
10
- information on impacts on human rights, including those concerning forced
labour, child labour, privacy, freedom of expression, access to clean water and
sanitation, and adequate housing, and
- information on protection of labour costs, payment times and cancel ations in
purchasing policies and practices.
iii)
respect for the human rights, fundamental freedoms, democratic principles
and standards established in the International Bill of Human Rights and other core UN
human rights conventions, the International Labour Organization’s Declaration on
Fundamental Principles and Rights at Work and the
relevant ILO conventions and in
particular the fundamental conventions
of the International Labour Organisation,
the
European Convention on human Rights, the European Social Charter, the Charter of
Fundamental Rights of the European Union
, the UN Guiding Principles on Business and
Human Rights, the OECD Guidelines for Multinational Enterprises , the European
Convention on Human Rights and its additional protocols, the UNECE Convention on
Access to Information, Public Participation in Decision Making and Access to Justice in
Environmental Matters (Aarhus Convention) the UN Declaration on the Rights of
Indigenous People (UNRIP ) and its principle of Free, Prior and Informed Consent, the
ILO Indigenous and Tribal People Convention, 1989, and Resolution 48/13 adopted by
the Human Rights Council on the 8 October 2021 on the human right to a clean,
healthy environment..
(i ia)
the undertaking’s value chain linked to adverse actual and potential impacts
on sustainability matters, including sector-specific information on suppliers, types of
products and services supplied, and on sourcing and traceability of commodities and
materials associated with a high likelihood of actual or potential adverse impacts on
sustainability matters.
(i ib) affected communities, including information on:
- human rights impact assessments carried out by the undertaking or their supply
and value chains
- respect for indigenous peoples’ rights and implementation of the undertaking’s
policy on the right to free prior and informed consent;
- health, safety and security of persons; freedom of assembly and freedom of
expression;
- human rights impacts related to land and access to water, and
- economic impacts on communities
(i ic) implementation and results of the undertaking’s due diligence process
COMPROMISE 14
Article 1-paragraph1.point 3.
-Article 19.b. paragraph 2. sub-paragraph 2. point c.
11
AM 56, 57, 58, 59, 60, 61, 62, 63, 64, 65 (S&D) ; AM 317, 318, 319, 321, 323, 325, 328,
332(Left); AM 320, 322, 327, 330, 331 (Renew); 326, 329 (EPP)
c) specify the information that undertakings are to disclose about governance factors
including information about:
i) the role of the undertaking’s administrative, management and supervisory bodies,
including with regard to sustainability matters,
engagement
and proper
implementation of the due diligence strategy,
including engagement with the
stakeholders affected by the identified impacts and their composition;
ia) respect for workers’ right to information and consultation as defined by national,
international and Union law
(ii)
business ethics and corporate culture, including anti-corruption
, anti-bribery
policies, risks assessments and programme ,
anti-workplace violence, anti-
harassment and internal alert mechanisms and arrangements within the
undertaking for protecting whistleblowers;
(iii)
political
and policy engagements
and influence of the undertaking, including
its
direct and indirect lobbying activities
, expenses, and political donations;
(i i)a management and quality of the relationships with state actors and in
particular with public administrations, and information on public administrative
procedural practices including public procurement;
(iv) business partners
management and quality of relationships
, including payment
and
purchasing practices,
in particular towards SMEs;
(iv)a corporate litigation and alternative dispute resolution practices;
(iv)b tax practices broken down by country;
(iv)c security practices
v)
the undertaking’s internal control and risk management systems, including in
relation to the undertaking’s reporting process
and implementation of the due
diligence strategy;
(v)a
the undertaking’s meaningful engagement with civil society, local
communities, informal actors and structures on sustainability matters, especial y
just transition measures and the undertaking’s social purpose;
(v)b
Information on beneficial ownership and organisational structure, including
subsidiaries, affiliates, joint ventures and non-ful y consolidated holdings
(v)c
corporate communication and information strategy and practices;
12
(v)d
respect for the rule of law and good governance systems of the country,
region or territory where the undertaking and its value and supply chain operate and
impact on the rule of law and good governance systems.
COMPROMISE 15
Article 1-paragraph1.point 3.
-Article 20 . paragraph 1.point g)
AM 68 Majorino, AM 343 (Renew)
(g) a description of the diversity
and inclusion policy applied in relation to the undertaking's
administrative, management and supervisory bodies with regard to gender
equality, anti-
discrimination, support for minority and vulnerable groups, including persons with
disabilities, and other aspects such as, age, or educational and professional backgrounds, the
objectives of that diversity policy, how it has been implemented and the results in the
reporting period.
COMPROMISE 16
Article 1-paragraph1.point 3.
-Articule 29.a.Paragraph 1.
AM 69 Majorino, AM 345 (Renew)
1.
Parent undertakings of a large group shall include in the consolidated management
report information necessary to understand the group's impacts on sustainability matters,
and information,
broken down by country, necessary to understand how sustainability
matters affect the group's development, performance and position.
This information shal be
published in a specific section of the management report and in a format equivalent to, and
compatible with, that laid down for the publication of the financial statements.
COMPROMISE 17
Article 1-paragraph1.point 3.
-Articule 29.a.Paragraph 2. Subparagraph 1.point a.
AM 70 (S&D), AM 347, 348, 357 (EPP), AM 354 (Comín) ; AM 349 (Renew) AM 350, 352, 356
(Left); AM 355 (Renew)
(a)
a brief description of the group's business model and strategy, including:
(i)
the resilience of the group's business model and strategy to risks related to
sustainability matters
and climate change;
13
(ii)
the opportunities
and risks for the group related to sustainability matters
and
the transition to a carbon-neutral economy;
(i a) the assessment by the undertaking of its impacts on sustainability matters;
(iii)
the plans of the group to ensure that the group’s business model and strategy
compatible with the transition to a sustainable economy and with the limiting of global
warming to 1.5 °C in line with the Paris Agreement;
(iv)
how the group’s business model and strategy take account of the interests of
the group’s stakeholders
with a specific reference on whether there have been direct
consultations with stakeholders to identify such information, and of the impacts of
the group on sustainability matters
including group’s measures to ensure respect
workers’ rights, decent work conditions, fair wages, training and further education
for workers, information and consultation of workers and safeguard the rights of
trade unions;
(v) how sustainability matters
and related targets, in connection with principal risks,
opportunities, and severe impacts, have been integrated into the undertaking’s
group’s
strategy and how the group’s strategy has been implemented with regard to
sustainability matters
and climate change.
COMPROMISE 18
Article 1-paragraph1.point 3.
-Articule 29.a. Paragraph 2. Subparagraph 1.point e.
AM 71, 72 (Majorino), AM 361, 365 (Greens); AM 362 (Renew); AM 363, 364, 366, 367, 368
(Left)
e) a description of:
(i) the due diligence process implemented with regard to sustainability
in particular on
environment, human rights, rule of law and good governance systems along the entire
supply and value chain, including gender equality and workers’ rights as wel as plans
to eradicate child labour and forced labour, in fully accordance with international
and regional human rights conventions, guidelines and standards such as the UN
Guiding Principles on Business and Human Rights, the OECD Due Diligence Guidance
for Responsible Business Conduct, the International Labour Organisation (ILO)
Declaration on Fundamental Principles and Rights at Work, the ILO fundamental
conventions and the Charter of Fundamental Rights of the European Union an in line
with applicable EU legislation on due diligence (Directive XXX)
The reporting requirements as regards due diligence should be based upon the
upcoming legislation on corporate due diligence.
(i)a the structure of the undertaking’s value chain including through a mapping of its
own operations, subsidiaries, suppliers and business relationships.
14
Disclosed information should include names, locations, types of products and services
supplied
(ii) the actual or potential adverse impacts connected with the group’s value chain
as
identified through the due diligence process including its own operations, its products
and services, its
subsidiaries, its business relationships and its supply chain
including
with regard to al people affected by those impacts with particular attention to
persons who frequently face discrimination or are in a vulnerable situation, such as
women, children, minorities, indigenous people, persons experiencing poverty or
social exclusion;
LGBTIQ persons or persons with disabilities; the effect of the
undertaking’s business policies, practices and decisions on the identified issues,
including of the undertaking’s purchasing policies and practices;
(iii) any actions taken, and the result of such actions, to
identify, assess, prevent,
mitigate
cease, monitor, communicate, account for, address and or remediate actual
or potential adverse impacts;
COMPROMISE 19
Article 1-paragraph1.point 3.
-Articule 29.a. Paragraph 3.
AM 74 (S&D), AM 372 (EPP), AM 374, 378 (Left), AM 376 (Renew)
3.
The information referred to in paragraphs 1 and 2 shall contain,
as much as possible,
forward-looking information and information about past performance,
in qualitative and
quantitative
form. This information shall take into account short, medium and long-term time
horizons, where appropriate.
The information referred to in paragraphs 1 and 2 shall include information about the group’s
value chain, including its own operations,
workforce, investments, assets, its products and
services, its business relationships and its supply chain, where appropriate.
The information referred to in paragraphs 1 and 2 shall also, where appropriate, include
references to, and additional explanations of, other information included in the consolidated
management report in accordance with Article 29 of this Directive and amounts reported in
the consolidated financial statements.
COMPROMISE 20
Article 1-paragraph1.point 3.
-Articule 29.a. Paragraph 7.
AM 75 (S&D),AM 380 (Renew), AM 381, 382, 383, 385, 386 (Left) AM 384 (EPP)
15
The consolidated management report of the parent undertaking shall be published in
accordance with Article 30, in the manner prescribed by the law of the Member State by
which the parent undertaking that is
subjected to the obligations set out in paragraphs 1 to 4
is governed.
The Member State by which the parent undertaking is governed may require that the
consolidated management report
of that parent undertaking is published in its official
language or in a language customary in the sphere of international finance.
The consolidated management report of
subsidiary of a parent undertaking that
is subjected
to the obligations set out in paragraphs 1 to 4 shall contain the name and registered office of
the parent undertaking that reports information at group level in accordance with Articles 29
and this Article, or in a manner that may be considered equivalent, in accordance with the
relevant implementing measures adopted pursuant to Article 23(4)(i) of Directive
2004/109/EC, to the manner required by the sustainability standards adopted pursuant to
Article 19b;
COMPROMISE 21
RECITAL 8
AM 4 (S&D), AM 89 (Greens), AM 90 (Left) , AM 91 (Renew)
8)
The ultimate beneficiaries of better sustainability reporting by undertakings are
public
authorities, individual citizens and savers.
Policy makers and public authorities need this
information in order to design and implement public policies, and in particular to protect
people’s rights and the environment, to hold undertakings accountable for their impacts
and to conduct a just social and environmental transition. Savers who want to invest
sustainably will have the opportunity to do so, while all citizens should benefit from a stable,
transparent (Renew) sustainable and inclusive economic system. To realise these benefits,
the sustainability information disclosed in undertaking’s annual reports first has to reach
three primary groups (‘users’).
The first group of users consists of users consists of policy
makers and public authorities. The second group of users investors, including asset
managers, who want to better understand the risks and opportunities that sustainability
issues pose to their
reputation and investments and the impacts of those investments on
people,
in particular workers and local communities and the environment. The
third group
of users consists of
civil society actors, including,
international organisations, national,
regional and local governments, non-governmental organisations
, social partners,
indigenous people and local communities that wish to better hold undertakings to account
for their impacts on people and the environment. Other stakeholders may also make use of
sustainability information disclosed in annual reports
to foster the comparability across
market sectors on the basis of environmental merits, corporate entities should disclose the
degree to which they contribute to economic activities that qualify as environmental y
sustainable pursuant to Article 3 of Regulation (EU) 2020/852 on Sustainable Finance
Taxonomy and ful y respect the ‘do no significant harm principle pursuant to Article 17 of
16
Regulation (EU) 2020/852. The business partners of undertakings, including customers, may
rely on this information to understand, and where necessary report on, the sustainability risks
and impacts through their own
supply and value chains.
Experts, policy makers,
social
partners non–governmental organisations , and environmental agencies may use such
information, in particular on an aggregate basis, to monitor
, verify and compare
environmental
, climate and social
data and trends, to contribute to environmental
accounts
and social progress and to inform public policy. Few individual citizens and consumers directly
consult undertaking’s reports, but they may use such information indirectly such as when
considering the advice or opinions of financial advisers or non-governmental organisations.
Many investors and asset managers purchase sustainability information from third party data
providers, who collect information from various sources, including public corporate reports.
COMPROMISE 22
RECITAL 9
Am 5 (S&D), AM 92 (Greens) , AM 93 (Renew)
9)
There has been a very significant increase in demand for corporate sustainability
information in recent years, especially on the part of the investment community
and civil
society. That increase in demand is driven by the changing nature of risks to undertakings and
growing investor awareness of the financial implications of these risks. That is especially the
case for climate-related financial risks. Awareness of the risks to undertakings and to
investments resulting from other environmental issues,
notably related to climate and
biodiversity, and from social issues, including health issues, is also growing. The increase in
demand for sustainability information is also driven by the growth in investment products
that explicitly seek to meet certain sustainability standards or achieve certain sustainability
objectives,
in line with international EU commitments, notably regarding the Paris
Agreement on climate change and the Convention on Biological Diversity. Part of that
increase is the logical consequence of previously adopted Union legislation, notably
Regulation (EU) 2019/2088 and Regulation (EU) 2020/852. Some of the increase would have
happened in any case, due to fast-changing citizen awareness, consumer preferences and
market practices. The COVID-19 pandemic will further accelerate the increase in users’
information needs, in particular as it has exposed the vulnerabilities of workers and of
undertaking’s
due diligence along the supply and value chains. Information on environmental
impacts is also relevant in the context of mitigating future pandemics with human disturbance
of ecosystems increasingly linked to the occurrence and spread of diseases.
COMPROMISE 23
RECITAL 12
17
AM 7(S&D) ; AM 98 (Renew) ; AM 97 (Greens ) , AM 99 (Comín)
12)
In the absence of policy action, the gap between users’ information needs and the
sustainability information reported by undertakings is expected to grow. This gap has
significant negative consequences. Investors are unable to take sufficient account of
sustainability-related risks and opportunities in their investment decisions. The aggregation
of multiple investment decisions that do not take adequate account of sustainability-related
risks has the potential to create systemic risks that threaten financial stability. The European
Central Bank and international organisations such as the Financial Stability Board have drawn
attention to those systemic risks, in particular in the case of climate. Investors are also less
able to channel financial resources to undertakings and economic activities that address and
do not exacerbate social and environmental problems, which undermines the objectives of
the European Green Deal and the Action Plan on Financing Sustainable Growth,
the objectives
of the Paris Agreement on climate change and the Convention on Biological Diversity. Non-
governmental organisations, social partners, communities affected by undertakings’
activities, and other stakeholders are less able to hold undertakings accountable for their
adverse impacts on people,
human rights, the environment,
including in their activities in
third countries, and on the rule of law and good governance systems, including in
developing countries where the institutions that are constitutional y in charge of defending
and protecting those organisations, social partners, communities and other stakeholders
are undermined. This creates an accountability deficit, and may contribute to lower levels of
citizen trust in businesses, which in turn may have negative impacts on the efficient
functioning of the social market economy. The lack of generally accepted metrics and
methods for measuring, valuing, and managing sustainability-related risks is also an obstacle
to the efforts of undertakings to ensure that their business models and activities are
sustainable.
The lack of sustainability information also limits the ability of stakeholders,
including civil society actors, trade unions, indigenous people and local communities, to
enter into dialogue with undertakings on sustainability matters.
COMPROMISE 24
RECITAL 15
AM 8, 10 (S&D), AM 101, 110 (Left), AM 103, 111 (Renew)
15)
Articles 19a and 29a of Directive 2013/34/EU apply to large undertakings that are
public-interest entities with an average number of employees in excess of 500, and to public-
interest entities that are parent undertakings of a large group with an average number of
employees in excess of 500 on a consolidated basis, respectively. In view of the growth of
users’ needs for sustainability information, additional categories of undertakings should be
required to report such information. It is therefore appropriate to require all large
undertakings and all undertakings listed on regulated markets, except micro undertakings,
al
public interest entities, al smal and medium sized undertakings operating in high-risk
economic activity sectors, to report detailed sustainability information. In addition, all
undertakings that are parent undertakings of large groups should prepare sustainability
reporting at group level
based on individual reports by subsidiary undertakings.
Undertakings established outside the Union, but operating in the internal market should be
18
subjected to the same requirements in order to account for their sustainability impacts and
to provide a level playing field for undertakings established in the EU.
15a new). The specific situation of undertakings which, although not having any legal
establishment in the Union, regularly engage in significant economic activity within the
Union, should be taken into account. The requirement that undertakings established in third
countries that operate in the European Union also disclose information on sustainability
matters is necessary to account for the need of European users, consumers and investors to
access information about sustainability matters related to their activities. It is also
necessary in order to guarantee a level playing field in the single market between
undertakings established in the European Union and third-country undertakings.
COMPROMISE 25
RECITAL 18
AM 11 (S&D), AM 113 (Renew), AM 114 (Left)
18)
Considering the growing relevance of sustainability-related risks and taking into
account that small and medium-sized enterprises (SMEs) listed on regulated markets
comprise a significant proportion of all listed undertakings in the Union, in order to ensure
investor protection
as wel as due diligence with regard to the environment, human rights
and Rule of law and good governance systems, it is appropriate to require that also those
SMEs disclose information on sustainability matters
. It is also appropriate to require al SMEs
operating in high risk sectors of economic activity, defined as those sectors with a significant
impact on human rights, the environment and Rule of law and good governance systems to
carry out sustainability reporting. The introduction of this requirement will help to ensure
that financial market participants can include smaller listed undertakings in investment
portfolios on the basis that they report the sustainability information that financial market
participants need. It will therefore help to protect and enhance the access of smaller listed
undertakings to financial capital, and avoid discrimination against such undertakings on the
part of financial market participants. The introduction of this requirement is also necessary
to ensure that financial market participants have the information they need from investee
undertakings to be able to comply with their own sustainability disclosure requirements laid
down in Regulation (EU) 2019/2088. SMEs listed on regulated markets should, however, be
provided with sufficient time to prepare for the application of the requirement to report
sustainability information, due to their smaller size and more limited resources, and taking
account of the difficult economic circumstances created by the COVID-19 pandemic. They
should also be given the possibility to report according to standards that are proportionate
to the capacities and resources of SMEs.
SMEs not carrying out high risk economic activities
and non-listed SMEs can also choose to use these proportionate standards on a voluntary
basis. The SME standards will set a reference for undertakings that are within the scope of
the Directive regarding the level of sustainability information that they could reasonably
request from SME suppliers and clients in their
supply and value chains.
COMPROMISE 26
RECITAL 18 a
19
AM 12 (S&D) ; AM 115 (Renew); 86, (Greens), 105, 106, 107, 108 (Left)
(18a) Certain sectors of economic activity are recognised as posing particularly significant
sustainability risks. A high-risk economic activity sector is a sector that is associated, as a
result of its business and value and supply chain characteristics, with a high likelihood of
actual or potential severe impacts on the environment , people, human rights as wel as on
the rule of law and good governance systems of the country, region or territory where the
undertaking or its value and supply chains operate.
Some sectors, such as among others, mining, extractives industries, agriculture, fisheries,
forestry and food production, fertilizers, pesticides and antibiotics, garment industry, plastic
production, timber, the electronic industry, the energy industry, finance and international
shipping or the gig economy, may be more exposed to severe environmental, social, human
right, impacts and Rule of law and governance systems, in particular in developing
countries.
In order to ensure that this Directive apply also to smal and medium undertaking operating
in high-risk sectors of economic activity. , such sectors should be defined. To this purpose,
The Commission shal be empowered to adopt delegated acts in accordance with Article 49
to establish and update a list of high-risk sectors of economic activity. . It is of particular
importance that the Commission carry out appropriate consultations during its preparatory
work, to establish and update the list of high-risk economic activity sectors, including at
expert level, and that those consultations be conducted in accordance with the principles
laid down in the Inter-institutional Agreement of 13 April 2016 on Better Law-Making. In
particular, to ensure their equal participation in the preparation of delegated acts,
Parliament and the Council should receive al documents at the same time as Member
States’ experts, and their experts should systematical y have access to meetings of
Commission expert groups dealing with the preparation of delegated acts. Smal and
medium-sized undertakings carrying out a high-risk economic activity should also be subject
to sustainability reporting obligations.
(18b)
The definition of sectors of high risk economic activity should be based on and inspired by
the NACE Codes and should take into account EU legislation, scientific evidence and data
about sectors that are particularly exposed to sustainability risks or are likely to have actual
or potential severe impacts on the environment, human rights and the rule of law and good
governance systems, sectors that are already considered “high-risk” under international
standards and sectors that are already considered “high-risk” under market or business
initiatives.
The definition of high-risk sectors of economic activity sectors should take into account also
the geographical area where the undertaking and its value and supply chain operate, in
particular if it is considered as a conflict affected or high-risk area as defined in Regulation
(EU) 2017/821.
20
The Commission should also take into account the work of the Platform on Sustainable
Finance established in accordance with Article 20 of Regulation (EU) 2020/852 and the OECD
Due Diligence Guidance for Responsible Business Conduct.
18c The requirement that smal and medium-sized undertakings operating in high-risk
sectors should disclose information on sustainability matters is mainly driven by the
likelihood and severity of sustainability impacts is higher in some specific sectors regardless
of the size of the undertaking.
COMPROMISE 27
RECITAL 21
AM 13 (S&D) AM 117 (Renew); AM 118 (Left)
(21)
Articles 19a(3) and 29a(3) of Directive 2013/34/EU currently exempt all subsidiary
undertakings from the obligation to report non-financial information where such
undertakings and their subsidiary undertakings are included in the consolidated management
report of their parent undertaking,
as defined in the aforementioned directive, provided this
includes the required non-financial information. It is necessary, however
, to ensure that
sustainability information
is easily accessible for users, and to bring transparency about
the
activities of al the undertakings covered by the scope of the
directive. It is therefore
necessary to require those subsidiary undertakings to publish
a management report
containing information on sustainability. The absence of an exemption does not affect the
possibility for a parent undertaking to pool costs and resources with its subsidiaries in order
for them to fulfil their obligations concerning sustainability reporting and auditing of
sustainability reporting. Nor does it affect the possibility for parent undertakings to produce
a consolidated management report.
COMPROMISE 28
RECITAL 26
AM 16 (S&D), AM 129 (Left) ; AM 130 (Greens ); AM 131 (Comín)
26)
Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to disclose
information about five reporting areas: business model, policies (including due diligence
processes implemented), the outcome of those policies, risks and risk management, and key
indicators relevant to the business. Article 19a(1) of Directive 2013/34/EU does not contain
explicit references to other reporting areas that users of information consider relevant, some
of which align with disclosures included in international frameworks, including the
recommendations of the Task Force on Climate-related Financial Disclosures. Disclosure
requirements should be specified in sufficient detail to ensure that undertakings report
information on their resilience to risks related to sustainability matters. In addition to the
reporting areas identified in Articles 19a(1) and 29a(1) of Directive 2013/34/EU, undertakings
should therefore be required to disclose information about their business strategy and the
resilience of the business model and strategy to risks related to sustainability matters, any
plans they may have to ensure that their business model and strategy are compatible with
21
the transition to a sustainable and climate-neutral
economy and the preservation of
biodiversity, in particular by delivering information in sectors causing most environmental
impact, such as agriculture, fishing, logging, mining and large-scale infrastructure; whether
and how their business model and strategy
respect and safeguard the rights, the interests
and the needs of stakeholders
including workers, indigenous people and local communities
and the principle of prior and informed consent; any opportunities
and risk for the
undertaking arising from sustainability matters; the implementation of the aspects of the
business strategy which affect, or are affected by sustainability matters; any
science-based
and time-bound short-term , mid-term and long-term sustainability targets set by the
undertaking
and a description of the investments, actions and policies adopted to achieve
those targets and of the progress made towards achieving them; the role of the board and
management with regard to sustainability matters; the
due diligence process implemented
with regard to sustainability matters, the actual and potential adverse impacts connected
with the undertaking’s activities;
the negative or positive effects of the undertaking’s
business practices, policies and decisions on the identified impacts and how the undertaking
has identified the information that they report on,
including on whether undertakings have
directly consulted with stakeholders to identify such information. Once the disclosure of
elements such as targets and the progress towards achieving them is required, the separate
requirement to disclose the outcomes of policies is no longer necessary.
COMPROMISE 29
RECITAL 27
AM 17 (S&D) ; AM 133 (Renew) , AM 134 (Greens) , AM 135 (Left)
(27)
To ensure consistency with international instruments such as the UN Guiding
Principles on Business and Human Rights
, including the UNGPs 10+, and the OECD Due
Diligence Guidance for Responsible Business Conduct
, the ILO Tripartite Declaration of
Principles concerning Multinational enterprises and Social Policy (ILO Tripartite
Declaration), the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) and its
principle of Free, Prior and Informed Consent (Greens) , as wel as other regional instruments
such as the Inter-American Standards for Business and human rights, the due diligence
disclosure requirements should be specified in greater detail than is the case in Article 19a(1),
point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process
that undertakings carry out to identify,
assess prevent, mitigate,
cease, monitor,
communicate, account for, address and remediate the actual and potential adverse impacts
connected with their activities. Impacts connected with an undertaking’s activities include
impacts directly caused by the undertaking, impacts to which the undertaking contributes,
and impacts which are otherwise linked to the undertaking’s
supply and value chain. The due
diligence process concerns the whole value chain of the undertaking including its own
operations, its products and services, its business relationships and its supply chains. In
alignment with the UN Guiding Principles on Business and Human Rights, an actual or
potential adverse impact is to be considered principal where it measures among the greatest
impacts connected with the undertaking’s activities based on: the gravity of the impact on
people or the environment; the number of individuals that are or could be affected, or the
scale of damage to the environment; and the ease with which the harm could be remediated,
restoring the environment or affected people to their prior state.
With regard to the impacts
22
on the rule of law and governance systems of the country where the undertaking and its
value and supply chains are operating, consistency and coherence should also be pursued
with other international and regional instruments, such as the UN Convention against
Corruption, Section VII of the OECD Guidelines for Multinational Enterprises and the
principles of the OECD Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions and related Recommendations.
COMPROMISE 30
RECITAL 34
AM 18 (S&D), AM 142(Left), AM143 (Renew); 144 (EPP)
(34)
The European Financial Reporting Advisory Group (EFRAG) is a non-profit association
established under Belgian law that serves the public interest by providing advice to the
Commission on the endorsement of international financial reporting standards. EFRAG has
established a reputation as a European centre of expertise on corporate reporting, and is well
placed to foster coordination between European sustainability reporting standards and
international initiatives that seek to develop standards that are consistent across the world.
In March 2021, a multi-stakeholder task force set up by EFRAG published recommendations
for the possible development of sustainability reporting standards for the European Union.
Those recommendations contain proposals to develop a coherent and comprehensive set of
reporting standards, covering all sustainability matters from a double-materiality perspective.
Those recommendations also contain a detailed roadmap for developing such standards, and
proposals for mutually reinforcing cooperation between global standard-setting initiatives
and standard-setting initiatives of the European Union. In March 2021, the EFRAG President
published recommendations for possible governance changes to EFRAG if it were to be asked
to develop technical advice about sustainability reporting standards. These recommendations
include offsetting up within EFRAG a new sustainability reporting pillar while not significantly
modifying the existing financial reporting pillar. When adopting sustainability reporting
standards, the Commission should take account of technical advice that EFRAG will develop.
In order to ensure high-quality standards that contribute to the European public good and
meet the needs of undertakings and of users of the information reported, EFRAG’s technical
advice should be developed with proper due process, public oversight and transparency,
accompanied by cost benefit analyses, and be
based on and developed
through a broad
consultation process.
The Commission should guarantee a transparent process avoiding any
risk of conflict of interest, as wel as the ful inclusion in the development of sustainability
reporting standards of trade unions, consumer organisations, NGOs and al other relevant
stakeholders
, such as international organisations or governments from countries where the
undertaking or its value and supply chain wil operate in order to represent the interests of
both groups of users referred to in Recital 8 of this Directive. To ensure that Union
sustainability reporting standards take account of the views of the Member States of the
Union, before adopting the standards the Commission should consult the Member State
Expert Group on Sustainable Finance referred to in Article 24 of Regulation (EU) 2020/852 on
EFRAG’s technical advice. The European Securities and Markets Authority (ESMA) plays a role
in drafting regulatory technical standards pursuant to Regulation (EU) 2019/2088 and there
needs to be coherence between those regulatory technical standards and sustainability
23
reporting standards. According to Regulation (EU) No 1095/2010 of the European Parliament
and of the Council54 , ESMA also plays a role in promoting supervisory converge in the
enforcement of corporate reporting by issuers whose securities are listed on EU regulated
markets and who will be required to use these sustainability reporting standards. Therefore,
ESMA should be required to provide an opinion on EFRAG’s technical advice. This opinion
should be provided within two months from the date of receipt of the request from the
Commission. In addition, the Commission should consult the European Banking Authority, the
European Insurance and Occupational Pensions Authority, the European Environment
Agency, the European Union Agency for Fundamental Rights, the European Central Bank, the
Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance
to ensure that the sustainability reporting standards are coherent with relevant Union policy
and legislation
. In addition, the expertise and opinion of the International Sustainability
Standards Board (ISSB) of the International Financial Reporting Standard (IFRS) Foundation
should be taken into account. Where any of those bodies decide to submit an opinion, they
shall do so within
three months from the date of being consulted by the Commission.
COMPROMISE 31
RECITAL 35
AM 19 (S&D) ; AM 145 (Renew), 146 (EPP)
(35) Sustainability reporting standards should be coherent with other Union legislation,
in particular with legislation dealing with the issues covered by this Directive. Those
standards should in particular be aligned with the disclosure requirements laid down in
Regulation (EU) 2019/2088, and they should take account of underlying indicators and
methodologies set out in the various delegated acts adopted pursuant to Regulation (EU)
2020/852, disclosure requirements applicable to benchmark administrators pursuant to
Regulation (EU) 2016/1011 of the European Parliament and of the Council55 , the minimum
standards for the construction of EU climate transition benchmarks and EU Paris-aligned
benchmarks; and of any work carried out by the European Banking Authority in the
implementation of the Pillar I I disclosure requirements of Regulation (EU) No 575/2013.
Standards should take account of Union environmental legislation, including Directive
2003/87/EC of the European Parliament and of the Council56 and Regulation (EC) No
1221/2009 of the European Parliament and of the Council57, and should take account of
Commission Recommendation 2013/179/EU58 and its annexes, and their updates.
Al other
relevant Union legislation, including Directive 2010/75/EU of the European Parliament and of
the Council59 , and requirements laid down in Union law for undertakings as regards directors’
duties and due diligence, should also be taken into account.
-----------
55 Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016
on indices used as benchmarks in financial instruments and financial contracts or to measure
the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU
and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).
56 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003
establishing a scheme for greenhouse gas emission allowance trading within the Community
and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32
24
57 Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25
November 2009 on the voluntary participation by organisations in a Community eco-
management and audit scheme (EMAS), repealing Regulation (EC) No 761/2001 and
Commission Decisions 2001/681/EC and 2006/193/EC (OJ L 342, 22.12.2009, p. 1).
58 Commission Recommendation 2013/179/EU of 9 April 2013 on the use of common
methods to measure and communicate the life cycle environmental performance of products
and organisations (OJ L 124, 4.5.2013, p. 1)
59 Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010
on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010,
p. 17).
COMPROMISE 32
RECITAL 36
AM 147 (Green ) AM 148 (Left)
36)
Sustainability reporting standards should take account of the Commission guidelines
on non-financial reporting60 and the Commission guidelines on reporting climate-related
information61 . They should also take account of other reporting requirements in Directive
2013/34/EU
, including reporting on payments to governments by undertakings sets out in
Chapter X , as wel as other reporting requirements not directly related to sustainability, with
the aim of providing the users of the reported information with a better understanding of the
development, performance, position and
environmental and social impact of the
undertaking, by maximising the links between the sustainability information and other
information reported in accordance with Directive 2013/34/EU
60 2017/C 215/01.
61 2019/C 209/01.
COMPROMISE 33
RECITAL 39
AM 20 (S&D) ; AM 152 (Renew) , AM 153 (Greens)
(39)
Sustainability reporting standards should also take account of internationally
recognised principles and frameworks on responsible business conduct, corporate social
responsibility, and sustainable development, including the UN Sustainable Development
Goals, the UN Guiding Principles on Business and Human Rights
, and its guidance on ensuring
that the activities of human rights defenders are not obstructed, the OECD Guidelines for
Multinational Enterprises, the OECD Due Diligence Guidance for Responsible Business
Conduct and related sectoral guidelines, the UN Global Compact, the Tripartite Declaration
of Principles of the International Labour Organisation concerning Multinational Enterprises
and Social Policy, the ISO 26000 standard on social responsibility, and the UN Principles for
Responsible Investment.
Other frameworks such as the UN Declaration on the Rights of
Indigenous Peoples (UNDRIP) and its principle of Free, Prior and Informed Consent, the UN
25
Convention against Corruption, Section VI of the OECD Guidelines for Multinational
Enterprises, the principles of the OECD Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions and related recommendations should also
be equal y taken into account.
COMPROMISE 34
RECITAL 43
AM 21 (S&D), 159(_Renew) ; AM 158 (Left); 160 (EPP)
(43)
Sustainability reporting standards should specify the information that undertakings
should disclose on social factors, including employee factors and human rights. Such
information should cover the impacts of undertakings on people, including on human health.
The
undertaking should disclose country-by-country information regarding their workforce,
working conditions, including wages per gender, working hours, workers’ physical and
psychological health and safety. It should also disclose information on social dialogue and
workers’ representation. The information that undertakings disclose about human rights
should include
the impacts on human rights and workers’ rights in their value and supply
chains, including but not limited to forced labour
and living wages, forced labour
and child
labour in their value
and supply chains. Reporting standards that address social factors should
specify the information that undertakings should disclose with regard to the principles of the
European Pillar of Social Rights that are relevant to businesses, including equal opportunities
for all and working conditions. The European Pillar of Social Rights Action Plan adopted in
March 2021 calls for stronger requirements on undertakings to report on social issues. The
reporting standards should also specify the information that undertakings should disclose
with regard to the human rights, fundamental freedoms, democratic principles and standards
established in the International Bill of Human Rights and other core UN human rights
conventions,
such as the Convention on the Rights of the Child and the UN Declaration on
the Rights of Indigenous Peoples, the International Labour Organization’s Declaration on
Fundamental Principles and Rights at Work,
the relevant conventions of the international
Labour Organisation and in particular the fundamental conventions of the International
Labour Organisation, and the Charter of Fundamental Rights of the European Union,
the
United Nations Guiding Principles on Business and Human Rights and the OECD Guidelines
for Multinational Enterprises..
COMPROMISE 35
RECITAL 44
26
AM 22 (S&D); AM 161 (Greens) , AM 162 (Left)
(44)
Users need information about governance factors, including information on the role
of an undertaking’s administrative, management and supervisory bodies, including with
regard to sustainability matters, the composition of such bodies, and an undertaking’s
internal control ,
alert mechanisms and risk management systems, including in relation to the
reporting process. Users also need information about undertakings’ corporate culture and
approach to business ethics, including
concrete indicators on anti-corruption and anti-bribery
policies and
programmes and about their political
and public policy engagements, including
lobbying activities
and on beneficial ownership and organisation structure as well as
on the
undertakings’ respect for the rule of law and good governance systems of the country where
the undertakings and their value and/or supply chains operate. Information, broken down
by countries, on corporate strategies and practices, on private and public procurement,
security, taxes, public administrative relations and procedures, corporate communication
and information, corporate litigation are also part of corporate governance aspects that are
important to be disclosed. The disclosure of these data aims at enabling investors to make
better-informed decisions, improving corporate governance and accountability and
contributing to containing tax evasion. Information about the management of the
undertaking and the quality of relationships with business partners, including payment
practices relating to the date or period for payment, the rate of interest for late payment or
the compensation for recovery costs referred to in Directive 2011/7/EU of the European
Parliament and of the Council62 on late payment in commercial transactions, helps users to
understand an undertaking’s risks as well as its impacts on sustainability matters. Every year,
thousands of businesses, especially SMEs, suffer administrative and financial burdens
because they are paid late, or not at all. Ultimately, late payments lead to insolvency and
bankruptcy, with destructive effects on entire value chains Increasing information about
payment practices should empower other undertakings to identify prompt and reliable
payers, detect unfair payment practices, access information about the businesses they trade
with, and negotiate fairer payment terms.
COMPROMISE 36
RECITAL 46
AM23 (S&D),AM 166 (Renew); AM 163(Greens) , AM 164 (Left)
46)
Undertakings in the same sector are often exposed to similar sustainability-related
risks, and they often have similar impacts on society and the environment. Comparisons
between undertakings in the same sector are especially valuable to investors and other users
of sustainability information. Sustainability reporting standards adopted by the Commission
should therefore specify both information that undertakings in all sectors should disclose and
information that undertakings should disclose depending on their sector of activity. Standards
applicable to undertakings in high-risk economic activity sectors should be consistent with
reporting requirements of Chapter 10 of Directive 2013/34/EU and require sustainability
disclosures to be made at project-level. Project-level disclosures are crucial for investors who
need consistent and detailed information on projects to ful y understand the impact of
climate-related financial risk. Project-level disclosure is equal y crucial for communities
27
affected and civil society organisations of resource-rich countries, to understand and
scrutinize the benefits of the economic activities and their environmental, social , human
rights and Rule of law and governance systems impacts. Standards should also take account
of the difficulties that undertakings may encounter in gathering information from actors
throughout their value chain, especially from SME suppliers
, from suppliers in emerging
markets and economies
or suppliers operating in fragile contexts, conflict-related areas or
affected by security concerns.
COMPROMISE 37
RECITAL 47
AM 24 (S&D) , AM 167 (Renew), AM 168 (Greens) , AM 169 (Left), 170 (EPP)
(47) To meet the information needs from users in a timely manner, and in particular given
the urgency to meet the information needs of financial market participants subject to the
requirements laid down in the delegated acts adopted pursuant to Article 4, paragraphs 6 and
7 of Regulation (EU) 2019/2088, the Commission should adopt a first set of reporting
standards
within one year and a half of the entry into force of this Directive. That set of
reporting standards should specify the information that undertakings should disclose with
regard to all reporting areas and sustainability matters, and that financial market participants
need to comply with the disclosure obligations laid down in Regulation (EU) 2019/2088. The
Commission should adopt a second set of reporting standards
within two year of the entry
into force of this Directive, specifying complementary information that undertakings should
disclose about sustainability matters and reporting areas where necessary, and information
that is specific to the sector in which an undertaking operates.
Standards for undertakings
active in high risks economic activity sectors where sustainability risks are the most severe
should be developed as a priority, in particular undertakings active in the extractive
industry, the manufacture of wearing apparel, large-scale crop, animal production and
seafood industry. The Commission should review the standards every
5 years to take account
of relevant developments, including the development of international standards.
A one-off
review of the standards should take place fol owing the adoption of the due diligence
legislation, in order to ensure as close as possible alignment between corporate
sustainability reporting and due diligence.
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