What a milestone week for meaningful marathon negotiation sessions that will shape the future of business!!!
Here is one headline, from the European Council: “Corporate sustainability due diligence: Council and Parliament strike deal to protect environment and human rights.”🥳
That’s right, as of this week, we have a provisional agreement between the European Council and the European Parliament on the EU Corporate Sustainability Due Diligence Directive.
Those companies that have been implementing the UN Guiding Principles on Business and Human Rights (UNGPs) since they were endorsed in 2011 will have a clear head start. Now is the time to consolidate, strengthen and elevate your business, human rights, climate and environmental work.💪🏼
Which companies will be covered by this new corporate sustainability due diligence directive? Large companies that have more than 500 employees and a net worldwide turnover of €150 million. And non-EU companies that have a €300 million net turnover generated in the EU. (We will know which these are, since the Commission will publish a list of non-EU companies that fall under the scope of the directive.) But keep in mind how these laws work - even those not in scope will start to be covered, since this will become the norm of business - through contracts, investor focus and other means beyond the law per se. 🫵
The directive includes all of the elements that companies who have been implementing the UNGPs for years know well. A risk-based approach to due diligence - from the perspective of the people involved. A prioritisation of risks, based on severity of risks to people. Distinct actions that are expected, depending on how the company is involved in the impact. A focus on remedy, and a focus on stakeholder engagement. And a focus on business strategies - with companies expected to address how their business strategies and own activities (including purchasing practices) can enhance or reduce risks. 🫂
When it comes to which standards to comply with, there are new human rights elements added to the Annex - in particular for vulnerable groups and core International Labour Organisation (ILO) Conventions - and the nature of environmental impacts covered by this directive are further clarified. And companies will have an obligation of means to adopt and put into effect a transition plan for climate change mitigation. 🗺️
Civil liability is strong, with a period of five years for those concerned by adverse impacts (including CSOs and trade unions) to bring claims, coupled with other measures such as limits to the costs of the proceedings. And companies can face up to 5% of total turnover in fines if they do not comply with the directive 💰
The financial sector is excluded. But this is subject to review in the future.
Final approval of the text is expected in March 2024, followed by the implementation of the directive by individual EU Member States.⏳
And in another marathon negotiation session, we avoided a disastrous COP28 outcome. Here is the headline instead from the UNFCCC: “COP28 Agreement Signals ‘Beginning of the End’ of the Fossil Fuel Era.”❗
We have just concluded the first global stocktake of climate action under the Paris Agreement with the first-ever COP decision to address fossil fuels. COP28 calls for accelerated short-term action and an orderly transition away from fossil fuels towards climate-neutral energy systems.
Specifically, parties are called on to “transition away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050.” The COP 28 agreement also highlights the importance of protecting and restoring nature and ecosystems and enhancing efforts to halt and reverse deforestation by 2030, and invites parties to preserve and restore oceans and coastal ecosystems.🪸
And parties adopted a framework for the global goal on adaptation, with 2030 targets for all parties to: conduct impact, vulnerability and risk assessments; adopt and implement adaptation plans and policy instruments; and set up monitoring, evaluation and learning systems for their national adaptation efforts.
It has indeed been a lot of hard work and a flurry of emotions. I find this image (below) so compelling - it says it all. The power is now in our hands to move all of this forward in a meaningful and purposeful way. ⏭️
Source: Oliver Jeffers depiction, discovered through Fiona Macklin - thank you
