Everything seemed on track for the European Commission’s publication in June of its legislative proposal on human rights and environmental due diligence. But a red card by the Commission’s Regulatory Scrutiny Board means the adoption of the proposal has now been postponed to autumn.
Legislation is still underway. However, it will take a few extra months before the European Commission is able to unveil its proposal. This is due to the Commission’s Regulatory Scrutiny Board having recently released a negative opinion on the Commission’s draft impact assessment. The impact assessment will therefore need to be revised in accordance with the Board’s findings before being submitted again.
It is not uncommon for the Regulatory Scrutiny Board to deliver negative opinions. However, the fact it that it relates to this very proposal, which has been much awaited by many, did generate a number of reactions from both the CSO and business communities.
In the meantime, the Commission published a summary of its public consultation on sustainable corporate governance, which demonstrates the divide between respondents in the area of directors’ duties. As a reminder, the Commission’s intention was to pair a due diligence duty with a new set of duties for companies’ directors to act in the interest of their stakeholders, and to potentially have stakeholders enforce those duties. This has been an area of much controversy in recent months. Authoritative voices such as John Ruggie had already expressed reservations about combining the two.
It therefore remains to be seen whether the due diligence part of the proposal will still be combined with the one about directors’ duties as originally planned.
Going forward, Justice Commissioner, Didier Reynders will share responsibility for the dossier with Internal Market Commissioner, Thierry Breton.
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