The EU is adopting mandatory supply chain due diligence schemes to regulate the placing of goods in the EU market. Currently, the Conflict Minerals, Timber, FLEGT, and Kimberley Process Certification schemes are in force. The Carbon Border Adjustment Mechanism, Deforestation-free, Forced Labor, and Batteries schemes are at various stages of adoption. The Due Diligence Directive requires companies, both EU and non-EU, to meet due diligence obligations with regard to human rights and environmental standards, with an enforcement mechanism, sanctions, and civil liabilities for non-compliance. The Directive applies to Group 1 companies, i.e., those with more than 500 employees and a net worldwide turnover of more than EUR 150 million in the last financial year, and Group 2 companies, i.e., companies with more than 250 employees and a net worldwide turnover of more than EUR 40 million, in high-risk sectors. Companies must integrate due diligence into their policies, identify potential adverse impacts on human rights and environmental impacts, prevent and mitigate potential adverse impacts, end and minimize actual adverse impacts, establish and maintain a complaints procedure, monitor the effectiveness of due diligence policy and measures, and publicly communicate on due diligence. Enforcement will take place at the national and EU levels, and directors of EU companies must take into account the consequences of their decisions for sustainability matters.
