REPORT on the proposal for a directive of the European Parliament and of the Council amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards[...]

Text proposed by the Commission

Amendment

(3) Article 26a(1) of Directive 2006/43/EC requires Member States to ensure that statutory auditors and audit firms carry out the assurance of sustainability reporting in compliance with limited assurance standards to be adopted by the Commission. Article 26a(3) of that Directive requires the Commission to adopt those standards by 1 October 2026. Undertakings have raised concerns on the work carried out by the assurance providers and have expressed the need for flexibility in addressing specific risks and critical issues identified in the areas of sustainability assurance. To enablethe Commission totake account ofthose concerns, it should be given more flexibility in adopting those standards. In any case, the Commission will issue targeted assurance guidelines by 2026 that clarify the necessary procedures that assurance providers are to perform as part of theirlimited assurance engagement before adopting thestandards bydelegated act.

(3) Article 26a(1) of Directive 2006/43/EC requires Member States to ensure that statutory auditors and audit firms carry out the assurance of sustainability reporting in compliance with limited assurance standards to be adopted by the Commission. Article 26a(3) of that Directive requires the Commission to adopt those standards by 1 October 2026. Undertakings have raised concerns on the work carried out by the assurance providers and have expressed the need for flexibility in addressing specific risks and critical issues identified in the areas of sustainability assurance. The Commission should duly takeintoaccount those concerns when working on thelimited assurance standards. The lack of harmonised assurancestandards is contributing to the problems experienced by undertakings, and it is therefore of the utmost urgency for the Commission to adopt a suitabledelegated act as planned.

Text proposed by the Commission

Amendment

(5) Article 19a(1) of Directive 2013/34/EU requires large undertakings and small and medium-sized undertakings with securities admitted to trading on an EU regulated market, excluding micro-undertakings, to prepare and publish a sustainability statement at individual level. To reduce the reporting burden on undertakings, the obligation to prepare and publish a sustainability statement at individual level should be reduced to largeundertakings with an average of more than 1000 employees during the financial year. Considering that for an undertaking to be large it has to exceed two out of the three criteria in Article 3(4) of Directive 2013/34/EU, this means that to be subject toto the reporting requirements anundertakings must have an average of more than 1000 employees during the financial year and either a net turnover above EUR 50 million or a balance sheet total above EUR 25 million.

(5) Article 19a(1) of Directive 2013/34/EU requires large undertakings and small and medium-sized undertakings with securities admitted to trading on an EU regulated market, excluding micro-undertakings, to prepare and publish a sustainability statement at individual level. To reduce the reporting burden on undertakings, the obligation to prepare and publish a sustainability statement at individual level should be reduced to undertakings with an average of more than 1000 employees and a net turnover of EUR 450 000 000during the financial year. It should be possible to exempt ultimate parent undertakings which are financial holdingundertakings not involved in management activities from complying with reporting obligations.

Text proposed by the Commission

Amendment

(6) A balance needs to be found between the objectives of data generation and reduction of administrative burden. Sustainability reporting, including the information referred to in Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council9 , of large undertakings with an average of more than 1000 employees during the financial year is indispensable to understand the transition to a climate-neutral economy. In the light of the balance to be found between the objectives of data generation and reduction of administrative burden, large undertakings within the new scope for sustainability reporting that have a net turnover not exceeding EUR 450 000 000 during the financial year should be able to disclose information referred to in Article 8 of Regulation (EU) 2020/852 in a more flexible way. The Commission should be empowered to set out rules supplementing the reporting regime for those undertakings. It should in particular be clarified that the Commission is empowered to specify the reporting regime for activities that are only partially taxonomy aligned.

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9 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13, ELI: http://data.europa.eu/eli/reg/2020/852/oj).

Text proposed by the Commission

Amendment

(7) Article 1(3) of Directive 2013/34/EU specifies that credit institutions and insurance undertakings that are large undertakings or small and medium-size undertakings - excluding micro-undertakings - with securities admitted to trading on an EU regulated market are subject to the sustainability reporting requirements set out in that Directive, regardless of their legal form. Considering that the scope of individual sustainability reporting should be reduced to largeundertakings with an average of more than 1000 employees during the financial year, that reduction in scope should also apply to credit institutions and insurance undertakings.

(7) Article 1(3) of Directive 2013/34/EU specifies that credit institutions and insurance undertakings that are large undertakings or small and medium-size undertakings - excluding micro-undertakings - with securities admitted to trading on an EU regulated market are subject to the sustainability reporting requirements set out in that Directive, regardless of their legal form. Considering that the scope of individual sustainability reporting should be reduced to undertakings with an average of more than 1000 employees and a net turnover of EUR 450 000 000during the financial year, that reduction in scope should also apply to credit institutions and insurance undertakings.

Text proposed by the Commission

Amendment

(7 a) For the purpose of consistency with this Directive, it is important that financial sector legislation remains coherent with its provisions. In this context, it should be considered whether requirements for the financial sector ought to be framed in a way that does not create an obligation for financial undertakings to obtain any information from undertakings which are not obliged to publish non-financial information pursuant to Article 19a or 29a of Directive 2013/34/EU. It should also be considered whether sector-specific financial services legislation, including delegated acts, guidelines by the ESAs and supervisory expectations, ought to be adapted to take into account the content of this Directive.

Text proposed by the Commission

Amendment

(9) Article 19a(3) of Directive 2013/34/EU requires undertakings to report information about the undertaking's own operations and about its value chain. It is necessary to reduce the reporting burden for undertakings in the value chain that are not required to report on their sustainability. The reporting undertaking, for the purposes of reporting sustainability information at individual or at consolidated level, as required by Directive 2013/34/EU, and without prejudice to Union requirements to conduct a due diligence process, should therefore not seek to obtain from undertakings established in or outside of the Union in its value chain that have up to1000 employees on average during the financial year any information that goes beyond the information specified in the standards for voluntary use by undertakings that are not required to report on their sustainability. The reporting undertaking should, however, be allowed to collect from such undertakings in its value chain any additional sustainability information that is commonly shared between undertakings in the sector concerned. Undertakings reporting on their value chain in accordance with those limitations should be deemed to comply with the obligation to report on their sustainability. Assurance providers should prepare their assurance opinion respecting the obligation on undertakings not to seek to obtain from undertakings in their value chain that have up to 1000 employees on average during the financial year any information that goes beyond the information specified in the standards for voluntary use by undertakings that are not required to report on their sustainability. For that purpose, the Commission should be empowered to adopt a delegated act to provide for sustainability reporting standards for voluntary use by undertakings that are not required to report on their sustainability. Those standards should be proportionate to, and relevant for, the capacities and the characteristics of those undertakings and to the scale and complexity of their activities. Those standards should also specify, where possible, the structure to be used to present that information.

(9) Article 19a(3) of Directive 2013/34/EU requires undertakings to report information about the undertaking's own operations and about its value chain. It is necessary to provide clarity andreduce the reporting burden for undertakings in the value chain that are not required to report on their sustainability. The reporting undertaking, for the purposes of reporting sustainability information at individual or at consolidated level, as required by Directive 2013/34/EU, and without prejudice to Union requirements to conduct a due diligence process, should therefore not seek to obtain from undertakings with an average of more than1000 employees and a net turnover of EUR 450 000 000on average during the financial year any information that goes beyond the information specified in the standards for voluntary use by undertakings that are not required to report on their sustainability. The reporting undertaking should adopt a risk-based approach, prioritising efforts to gather information on high-risk impacts and sustainability issues commonly associated with its sector andbe allowed to collect from such undertakings in its value chain any additional sustainability information that is commonly shared between undertakings in the sector concerned.Where not all the necessary information regarding their value chain is available, or such information is incomplete or subject to legal limitations, the undertakings should be allowed to explain the efforts made to obtain the necessary information about their value chain, the reasons why that information could not be obtained, and their plans to obtain such information in the future. Undertakings reporting on their value chain in accordance with those limitations should be deemed to comply with the obligation to report on their sustainability. Assurance providers should prepare their assurance opinion respecting the obligation on undertakings not to seek to obtain from undertakings in their value chain that have up to 1000 employees and a net turnover of EUR 450 000 000on average during the financial year any information that goes beyond the information specified in the standards for voluntary use by undertakings that are not required to report on their sustainability. For that purpose, the Commission should be empowered to adopt a delegated act to provide for sustainability reporting standards for voluntary use by undertakings that are not required to report on their sustainability. Those standards should be proportionate to, and relevant for, the capacities and the characteristics of those undertakings and to the scale and complexity of their activities. Those standards should also specify, where possible, the structure to be used to present that information. Undertakings within the value chain should be allowed to choose a template for reporting of sustainability information voluntarily, so that undertakings requesting information should not be required to assess or map the size categories of all entities in their value chain.

Text proposed by the Commission

Amendment

(9 a) Until the Commission adopts sustainability reporting standards for voluntary use, undertakings that report sustainability information voluntarily may do so according to the Commission recommendation 2025/4984, which is based on the voluntary standard for SMEs (VSME) developed by EFRAG. To ensure continuity and proportionality, the sustainability reporting standards for voluntary use adopted by the Commission as a delegated act should be based on that recommendation, and should be proportionate and take into account the think small first principle; should use simplified language and modularity allowing for flexibility and progression in the disclosures. The objective of this voluntary standard should be to support companies: (a) providing information that will help satisfy the data needs of undertakings requesting sustainability information from their suppliers; (b) providing information that will help satisfy data needs from banks and investors, therefore helping undertakings in their access to finance; (c) improving the management of the sustainability issues they face, i.e. environmental and social challenges such as pollution, workforce health and safety; this will support their competitive growth and enhance their resilience in the short-, medium- and long-term; and (d) contributing to a more sustainable and inclusive economy.

Text proposed by the Commission

Amendment

(9 b) Sustainability reporting requirements should not oblige an undertaking to disclose information such as intellectual capital, intellectual property, know-how or the results of innovation that would qualify as trade secrets as defined in Directive (EU) 2016/943 of the European Parliament and of the Council. The reporting requirements provided for in this amending Directive should therefore be without prejudice to Directive (EU) 2016/943.

Text proposed by the Commission

Amendment

(12) Article 29a(1) of Directive 2013/34/EU requires parent undertakings of large groups to prepare and publish a sustainability statement at consolidated level. To reduce the reporting burden on those parent undertakings, the scope of that obligation should be reduced to parent undertakings of largegroups with an average of more than 1000 employees, on a consolidated basis, during the financial year.

(12) Article 29a(1) of Directive 2013/34/EU requires parent undertakings of large groups to prepare and publish a sustainability statement at consolidated level. To reduce the reporting burden on those parent undertakings, the scope of that obligation should be reduced to parent undertakings of groups with an average of more than 1000 employees and a net turnover of EUR 450 000 000, on a consolidated basis, during the financial year.

Text proposed by the Commission

Amendment

(12 a) Directive (EU) 2022/2464 requires undertakings in scope to report sustainability information according to mandatory European Sustainability Reporting Standards (ESRS). In July 2023 the Commission adopted a first set of ESRS. To deliver swiftly on the simplification and streamlining of sustainability reporting the Commission should adopt a delegated act as soon as possible, and at the latest six months after the entry into force of this directive, to revise the first set of ESRS to substantially reform the standards by: (i) removing datapoints deemed least important for general purpose sustainability reporting, (ii) prioritising quantitative indicators over narrative text, (iii) providing clear instructions on how to apply the materiality principle, to ensure that undertakings are only required to report material information, and to reduce the risk that assurance service providers inadvertently encourage undertakings to report information that is not necessary or dedicate excessive resources to the materiality assessment process, (iv) improving consistency with other pieces of EU legislation, including financial services legislation, (v) ensuring to the greatest extent possible interoperability with global sustainability reporting standards.

Text proposed by the Commission

Amendment

(12 b) To better clarify the demands made to financial holding undertakings that are parent undertakings, only these are exempted from complying with the obligations set out in this directive. Likewise, to decrease the administrative burden on undertakings, for recent acquisitions of subsidiaries that are not reporting yet, parent undertaking should benefit of a 24 months transition period.

Text proposed by the Commission

Amendment

(13) Article 29b(1), third subparagraph, Directive 2013/34/EU empowers the Commission to adopt sector-specific reporting standards by way of delegated acts, with a first set of such standards to be adopted by 30 June 2026. To avoid an increase in the number of prescribed datapoints that undertakings should report, that empowerment should be removed.

(13) Article 29b(1), third subparagraph, Directive 2013/34/EU empowers the Commission to adopt sector-specific reporting standards by way of delegated acts, with a first set of such standards to be adopted by 30 June 2026. To avoid an increase in the number of prescribed datapoints that undertakings should report, that empowerment should be removed. The Commission should instead issue voluntary sector-specific guidelines to support undertakings and auditors in assessing their risks, opportunities and impacts in specific sectors, to facilitate the application of ESRS within a given sector, to identify the sustainability matters likely to be material for a specific sector and to reduce the burden of reporting. Those guidelines should be based on consultation with relevant stakeholders.

Text proposed by the Commission

Amendment

(14) Article 29b(4) of Directive 2013/34/EU requires sustainability reporting standards to not specify disclosures requiring undertakings to obtain from small and medium-sized undertakings in their value chain any information that goes beyond the information to be disclosed pursuant to the sustainability reporting standards for small and medium-sized undertakings with securities admitted to trading on an EU regulated market. Considering that small and medium-sized undertakings with securities admitted to trading on an EU regulated market should be excluded from sustainability reporting, and in order to reduce the reporting burden for undertakings in the value chain that are not required to report on their sustainability, the sustainability reporting standards should not specify disclosures requiring undertakings to obtain from undertakings in their value chain that have up to 1000 employees on average during the financial year any information that goes beyond the information to be disclosed pursuant to the sustainability reporting standards for voluntary use by undertakings that are not required to report on their sustainability.

(14) Article 29b(4) of Directive 2013/34/EU requires sustainability reporting standards to not specify disclosures requiring undertakings to obtain from small and medium-sized undertakings in their value chain any information that goes beyond the information to be disclosed pursuant to the sustainability reporting standards for small and medium-sized undertakings with securities admitted to trading on an EU regulated market. Considering that small and medium-sized undertakings with securities admitted to trading on an EU regulated market should be excluded from sustainability reporting, and in order to reduce the reporting burden for undertakings in the value chain that are not required to report on their sustainability, the sustainability reporting standards should not specify disclosures requiring undertakings to obtain from undertakings in their value chain that have up to 1000 employees and a net turnover of EUR 450 000 000on average during the financial year any information that goes beyond the information to be disclosed pursuant to the sustainability reporting standards for voluntary use by undertakings that are not required to report on their sustainability.

Text proposed by the Commission

Amendment

(14 a) Article 29b(4) of Directive 2013/34/EU requires sustainability reporting standards to take into account the difficulties undertakings may encounter in gathering information from actors throughout their value chain. In knowledge of recent attempts from third countries to block the sharing of data from non-EU countries to EU companies, Member States should allow information required by this Directive, in exceptional cases where an undertaking in a non-EU third country could be sanctioned due to third-country legislation simply by transmitting sustainability data, to replace the information not provided by the undertaking of a non-EU third country by default values. This default value, which is calculated or drawn from secondary data, should represent an estimation of the average value for an indicator, for a specific country and sector. When such default values are not available, Member States should allow information not to be disclosed if there is a danger of sanctions due to third-country legislation.

Text proposed by the Commission

Amendment

(15) Article 29d of Directive 2013/34/EU requires undertakings subject to the requirements in Articles 19a and 29a of that Directive to prepare their management report, or consolidated management report, where applicable, in the electronic reporting format specified in Article 3 of Commission Delegated Regulation (EU) 2019/81511and to mark up their sustainability reporting, including the disclosures provided for in Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council12, in accordance with the electronic reporting format to be specified in that Delegated Regulation. To provide clarity to undertakings, it should be specified that until such rules on the marking up are adopted by way of that a Delegated Regulation, for the marking upof sustainability reporting isadopted,undertakings areshould not be required to mark-up their sustainability reporting.

(15) Article 29d of Directive 2013/34/EU requires undertakings subject to the requirements in Articles 19a and 29a of that Directive to prepare their management report, or consolidated management report, where applicable, in the electronic reporting format specified in Article 3 of Commission Delegated Regulation (EU) 2019/81511and to mark up their sustainability reporting, including the disclosures provided for in Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council12, in accordance with the electronic reporting format to be specified in that Delegated Regulation. To provide clarity to undertakings, it should be specified that until such rules on the marking up of sustainability reporting areadopted by way of that Delegated Regulationundertakings should not be required to mark-up their sustainability reporting.

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11Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1, ELI: http://data.europa.eu/eli/reg_del/2019/815/oj).

11Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1, ELI: http://data.europa.eu/eli/reg_del/2019/815/oj).

12Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13, ELI: http://data.europa.eu/eli/reg/2020/852/oj).

12Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13, ELI: http://data.europa.eu/eli/reg/2020/852/oj).

Text proposed by the Commission

Amendment

(16) Article 33(1) of Directive 2013/34/EU specifies that the members of the administrative, management and supervisory bodies of an undertaking have collective responsibility for ensuring that the followingdocuments are drawn up and published in accordance with the requirements of that Directive. To provide flexibility dofor undertakings and reduce their reporting burden, it should be specifiedthat the collective responsibility of the members of the administrative, management and supervisory bodies of an undertaking for compliance with the requirements of Article 29d of that Directive as regards the digitalisation of the management report is limited to its publication in the single electronic format, including the marking up of the sustainability reporting therein.

(16) Article 33(1) of Directive 2013/34/EU specifies that the members of the administrative, management and supervisory bodies of an undertaking have collective responsibility for ensuring that certaindocuments are drawn up and published in accordance with the requirements of that Directive. To provide flexibility for undertakings and reduce their reporting burden, Member States can providethat the collective responsibility of the members of the administrative, management and supervisory bodies of an undertaking for compliance with the requirements of Article 29d of that Directive as regards the digitalisation of the management report is limited to its publication in the single electronic format, including the marking up of the sustainability reporting therein.

Text proposed by the Commission

Amendment

(17) Pursuant to Article 40a(1), fourth and fifth subparagraphof Directive 2013/34/EU, a subsidiary in the Union of a third-countyundertaking that generates a net turnover of more than EUR 150 million in the Union, or, in the absence of such subsidiary, a branch in the Union that generates a net turnover of more than EUR 40 million, is to publish and make accessible sustainability information at the group level of the third-country parent undertaking. To reach closer alignment with the criteria used to define which undertakings are in the scope of Directive (EU) 2024/1760, the net turnover threshold for the third-country undertaking should be raised from EUR 150 000 000 to EUR 450 000 000.For reasons of consistency and burden reduction, the size for a subsidiary undertaking and a branch to be in scope of Article 40a should be adjusted. The size of the subsidiary undertaking should be that of a large undertaking, whilst the net turnover criteria forthe branch should be raised from EUR 40 000 000 to EUR 50 000 000, to align with thenet turnover threshold for large undertakings.

(17) Pursuant to Article 40a(1), fourth and fifth subparagraphsof Directive 2013/34/EU, a subsidiary in the Union of a third-countryundertaking that generates a net turnover of more than EUR 150 million in the Union, or, in the absence of such subsidiary, a branch in the Union that generates a net turnover of more than EUR 40 million, is to publish and make accessible sustainability information at the group level of the third-country parent undertaking. For reasons of consistency and burden reduction, and in order to ensure a level playing field, the size for a subsidiary undertaking and a branch to be in scope of Article 40a should be adjusted. The size of the subsidiary undertaking andthe branch should be set at anet turnover of more than EUR 450 000 000.

Text proposed by the Commission

Amendment

(18) Article 5(2), first subparagraph, of Directive (EU) 2022/2464 specifies the dates by which the Member States are to apply the sustainability reporting requirements set out in Directive 2013/34/EU, with different dates depending on the size of the undertaking concerned. Considering that the scope of the individual sustainability reporting requirements should be reduced to include only largeundertakings with more than 1000 employees on average during the financial year, and that the scope of the consolidated sustainability reporting requirements should be reduced accordingly, the criteria for determining the dates of application should be adjusted, and the reference to small and medium-sized undertakings with securities admitted to trading on an EU regulated market should be removed.

(18) Article 5(2), first subparagraph, of Directive (EU) 2022/2464 specifies the dates by which the Member States are to apply the sustainability reporting requirements set out in Directive 2013/34/EU, with different dates depending on the size of the undertaking concerned. Considering that the scope of the individual sustainability reporting requirements should be reduced to include only undertakings with more than 1000 employees and a net turnover of EUR 450 000 000on average during the financial year, and that the scope of the consolidated sustainability reporting requirements should be reduced accordingly, the criteria for determining the dates of application should be adjusted, and the reference to small and medium-sized undertakings with securities admitted to trading on an EU regulated market should be removed.

Text proposed by the Commission

Amendment

(19) Article 5(2), third subparagraph, of Directive (EU) 2022/2464 specifies the dates by which the Member States are to apply the sustainability reporting requirements set out in Directive 2004/109/EC, with different dates depending on the size of the issuer concerned. Considering that the scope of the individual sustainability reporting requirements should be reduced to include only largeundertakings with more than 1000 employees on average during the financial year, and that the scope of the consolidated sustainability reporting requirements should be reduced accordingly, the criteria for determining the dates of application should be adjusted, and the reference to small and medium-sized undertakings should be removed.

(19) Article 5(2), third subparagraph, of Directive (EU) 2022/2464 specifies the dates by which the Member States are to apply the sustainability reporting requirements set out in Directive 2004/109/EC, with different dates depending on the size of the issuer concerned. Considering that the scope of the individual sustainability reporting requirements should be reduced to include only undertakings with more than 1000 employees and a net turnover of EUR 450 000 000on average during the financial year, and that the scope of the consolidated sustainability reporting requirements should be reduced accordingly, the criteria for determining the dates of application should be adjusted, and the reference to small and medium-sized undertakings should be removed.

Text proposed by the Commission

Amendment

(20) Article 4(1) of Directive (EU) 2024/1760 prohibits Member States from introducing, in their national law, provisions within the field covered by the Directive laying down human rights and environmental due diligence obligations diverging from those laid down in Article 8(1) and (2), and Article 10(1) of that Directive. To ensure that Member States do not go beyond that Directive and to avoid the creation of a fragmented regulatory landscape resulting in legal uncertainty and unnecessary burden, the full harmonisation provisions of Directive (EU) 2024/1760 should be expanded to additional provisions regulating the core aspects of the due diligence process. That includes, in particular, the identification duty, the duties to address adverse impacts that have been or should have been identified, the duties to engage with stakeholders in certain cases, and the duty to provide for a complaints and notification mechanism. At the same time, Member States should be allowed to introduce more stringent or more specificprovisions on other aspects, including to address emerging risks linked to newproducts or services.

(20) Article 4(1) of Directive (EU) 2024/1760 prohibits Member States from introducing, in their national law, provisions within the field covered by the Directive laying down human rights and environmental due diligence obligations diverging from those laid down in Article 8(1) and (2), and Article 10(1) of that Directive. To ensure that Member States do not go beyond that Directive and to avoid the creation of a fragmented regulatory landscape resulting in legal uncertainty and unnecessary burden, the full harmonisation provisions of Directive (EU) 2024/1760 should be expanded to additional provisions regulating the core aspects of the due diligence process. That includes, in particular, the provisions on due diligence at group level,identification duty, the duties to address adverse impacts that have been or should have been identified, prioritisation, the duties to engage with stakeholders in certain cases, and the duty to provide for a complaints and notification mechanism. At the same time, Member States should continue tobe allowed to introduce or maintainprovisions of national law regulating specific adverse impacts or specific sectors of activity, specificproducts or services, in order to achieve a different level of protection of human, employment and social rights, the environment or the climate.

Text proposed by the Commission

Amendment

(21) Article 5 of Directive (EU) 2024/1760 obliges Member States to ensure that large companies above a certain size conduct risk-based human rights and environmental due diligence. To reduce burdens on companies that have to comply with that obligation, the required due diligence should, as a general rule, be limited to the company's own operations, those of its subsidiaries and those of its direct business partners ('tier 1'). Consequently, when it comes to business relationships, companiesshould, after having mapped their chains of activities, be required to carry out in-depth assessments as regards direct business partners only. Companies should, however, look beyond their direct business relationships where they have plausible information that suggests an adverse impact at the level of an indirectbusiness partner. Plausible information means information of an objective character that allows thecompany to conclude that there is a reasonable likelihood that the information is true. This may be the case where the company concerned has received a complaint or is in the possession of information, for example through credible media or NGO reports, reports of recent incidents, or through recurring problems at certain locations about likely or actual harmful activities atthe level of an indirect business partner. Where the company has such information, it should carry out an in-depth assessment. Companies should alsocarry out in-depth assessments with respect toadverse impacts arising beyond their direct business partner where the structure of this business relationship lacks economic rationale and suggests that it was chosen to remove an otherwise direct supplier with harmful activities from the purview of the company. Where the in-depth assessment confirms the likelihood or existence of the adverse impact, it should then be deemedto be identified. In addition,companies should seek to ensure that their code of conduct - which is part of their due diligence policy and sets out the expectations as to how to protect human, including labour, rights and the environment in business operations - is followed throughout the chain of activities in accordance with contractual cascading and SME support.

(21) Article 5 of Directive (EU) 2024/1760 obliges Member States to ensure that large companies above a certain size conduct risk-based human rights and environmental due diligence. To ensure effectiveness,reduce burdens on companies that have to comply with that obligation and ensure that their resources are used purposefully, the required due diligence and measures takenshould take into account relevant risk factors, including company-level risk factors, such as whether thebusiness partner is not acompany covered by this Directive, business operation risk factors, geographic and contextual risk factors, such asthe level of law enforcement with respect to the type of adverse impacts; product and service risk factors, and sectoral risk factors. Companies should carry out the scoping to identify general areas whereadverse impacts are most likely to occur andto be most severe. Based on the results of scoping thecompanies should be required, where on the basis of relevant and verifiable information the company has grounds to believe that adverse impacts have arisen or may arise, to carry out further assessments only in areas where adverse impacts were identified to be most likely to occur and most severe.

Text proposed by the Commission

Amendment

(22) To limit the trickle-down effect on small and medium-sized undertakings and small midcap companies when it comes to mapping the valuechain to identify adverse impacts, largecompanies should limit information requests to theinformation specified in the standards for voluntary use referred to in Article 29a of Directive (EU) 2013/34/EU, unless they needadditional information to carry out the mapping and theycannot obtain thatinformation in any other reasonable way.

(22) To limit the trickle-down effect on other companies, includingsmall and medium-sized undertakings and small midcap companies when it comes to the scoping of thechain of activitiesto identify adverse impacts, companies within the scopeshould not seek to obtaininformation from their business partners but rely only on information that is already reasonably available, such as publicly known information, information from searches and information gained through earlier cooperation. Entity-level information and communication with business partners is not relevant at this stage. It should only be possible to seek such information for further assessments under certain conditions. In such a case, it should be possible to seek information from business partners only where, following a risk-based approach, such information is necessary in light of indications of likely adverse impacts from business partners with fewer than 5000 employees where suchadditional information cannot reasonably be obtained by other means, mainly from existing or secondary sources. In any case, any request should be targeted, reasonable and proportionate. In order to facilitate compliance for companies and the relevant business partners, it should be possible toobtain the necessaryinformation either individually or collaboratively.

Text proposed by the Commission

Amendment

(22 a) While keeping with the objective of prioritising the most adverse and likely impacts, companies should be given significant flexibility in deciding which risks to address first on the basis of the severity and likelihood of an adverse impact. Such a decision should be based on the scale, scope or irremediable character of the adverse impact, taking into account the gravity of the impact. Once the most severe and likely adverse impacts are addressed in reasonable time, companies should address less severe and less likely adverse impacts. However, companies should not be penalised for any harm stemming from less significant adverse impacts that were not yet addressed according to the prioritisation in line with these principles.

Text proposed by the Commission

Amendment

(23) Companies may find themselves in situations where their production heavily relies on inputs from one or several specific suppliers. At the same time, where the business operations of such a supplier are linked to severe adverse impacts, including child labour or significant environmental harm, and the company has unsuccessfully exhausted all due diligence measures to address those impacts, the company, as a last resort should suspend the business relationship while continuing to work with the supplier towards a solution, where possible using any increased leverage resulting from the suspension.

(23) Companies may find themselves in situations where their production heavily relies on inputs from one or several specific suppliers. At the same time, where the business operations of such a supplier are linked to severe adverse impacts, including child labour or significant environmental harm, and the company has unsuccessfully exhausted all due diligence measures to address those impacts, the company, as a last resort should temporarilysuspend the business relationship while continuing to work with the supplier towards a solution, where possible using any increased leverage resulting from the suspension. The company should assess, in consultation with relevant stakeholders, whether such suspension leads to a substantial prejudice for the company, including where crucial business partners provide raw materials, products or services which are essential to the company's business to which no available alternative exists. Substantial prejudice should be interpreted as a negative and significant effect on the company's legal, financial or economic situation or its production capacity, including in the long term, such as an effect giving rise to the likelihood of insolvency. In order not to undermine the aims of this Directive, the decision not to suspend the business relationship should be subject to conditions, including reporting to the competent supervisory authority about the duly justified reasons for such a decision. Companies should also assess if the adverse impacts from suspension can be reasonably expected to be manifestly more severe than the adverse impact that could not be prevented or adequately mitigated. Should that be the case, the company should not be required to suspend the business relationship and should be in a position to report to the competent supervisory authority about the duly justified reasons for such a decision.

Text proposed by the Commission

Amendment

(24) To reduce burdens on companies and make stakeholder engagement more proportionate, companies should only have to engage with workers, their representatives including trade unions, and individuals and communities whose rights or interests are or could be directly affected by the products, services and operations of the company, its subsidiaries and its business partners andthat have a link to the specific stage of the due diligence process being carried out. That includes individuals or communities in the neighbourhood of plants operated by business partners where those individuals or communities are directly affected by pollution, or indigenous people whose right to lands or resources are directly affected by how a business partner acquires, develops or otherwise uses land, forests or waters. Moreover, stakeholder engagement should only be required for certain parts of the due diligence process, namely at the identification stage, for the development of (enhanced) action plans and when designing remediation measures.

(24) To reduce burdens on companies and make stakeholder engagement more proportionate, companies should only have to engage with their employees, the employees oftheir subsidiaries and of their business partners, therepresentatives of those employeesincluding trade unions, and individuals and communities whose rights or interests are or could be directly affected by the adverse impacts on human rights and the environment that stem from theproducts, services and operations of the company, its subsidiaries and its business partners. In line with the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, this includes the legitimate representatives of those individuals or communities. They play an important role for communities, such as indigenous peoples or local communities, but can also be relevant for individuals, in particular in situations where it is not possible or appropriate to engage directly with individual rightsholders, or not all of them. For instance, it may be difficult to reach out to certain rightsholders, due to, for example, communication barriers, but especially in situations where their security cannot be guaranteed (such as in conflict areas or if rightsholders fear reprisals) or there is a serious lack of trust. Legitimate representatives might for instance be community leaders, the individuals or bodies representing indigenous peoples in accordance with their organisational rules and traditions (e.g., elected elders), consumer protection groups or, in certain situations, civil society organisations where they can be considered to genuinely represent the interests of rightsholders. Conversely, this does not include individuals or organisations which show solidarity with the case but without any specific connection and without any formal representation role. Directly affected individuals or communities are those right-holdersthat have a link to the specific stage of the due diligence process being carried out. That includes individuals or communities in the neighbourhood of plants operated by business partners where those individuals or communities are directly affected by pollution, or indigenous people whose right to lands or resources are directly affected by how a business partner acquires, develops or otherwise uses land, forests or waters. Moreover, stakeholder engagement should only be required for certain parts of the due diligence process, namely at the identification stage, for the development of (enhanced) action plans and when designing remediation measures.

Text proposed by the Commission

Amendment

(25) To reduce administrative burdens on companies, the Commission's deadline for the adoption of general due diligence guidelines should be advanced to 26 July 2026. In parallel, the application deadline for Directive (EU) 2024/1760 for the first group of companies should be deferred to 26 July 2028 in accordance with Directive (EU) XXX/XXX13. That two-year interval willshould provide companies with sufficient time to take into account the practical guidance and best practices included in the Commission's guidelines when implementing due diligence measures.

(25) To reduce administrative burdens on companies, the Commission's deadline for the adoption of general due diligence guidelines should be advanced to 26 July 2026. In parallel, the application deadline for Directive (EU) 2024/1760 for the first group of companies should be deferred to 26 July 2028 in accordance with Directive (EU) XXX/XXX 13. That two-year interval should provide companies with sufficient time to take into account the practical guidance and best practices included in the Commission's guidelines when implementing due diligence measures.

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13Directive (EU) 2025/XX of ……….

13Directive (EU) 2025/XX of ……….

Text proposed by the Commission

Amendment

(26) To ensure better alignment of Directive (EU) 2024/1760 with the sustainability reporting regime laid down in Directive (EU) 2022/2464, therequirement to put into effect the transition plan for climate change mitigation should be replaced by a clarification that the obligation ofcompanies toadopt a transition plan includes outlining implementing actions, planned and taken. The obligation to adopt the plan and its initial and updated designremains subject to administrative supervision.

(26) Therequirement to put into effect the transition plan for climate change mitigation should be replaced by a clarification that companies adopt a transition plan which aims to ensure, through reasonable efforts, that the business model and strategy of the company are compatible with the transition to a sustainable economy. Member States should ensure that this obligation is an obligation of means, not an obligation of results. The obligation to adopt the plan remains subject to administrative supervision.

Text proposed by the Commission

Amendment

(27) Article 27(1) of Directive EU 2024/1760 requires Member States to lay down penalties that are to be "effective, proportionate and dissuasive". Article 27(2) of that Directive requires Member States, when deciding whether to impose penalties and, if so, when determining their nature and appropriate level, to take due account of a series of factors that determine the gravity of the infringement and attenuating or aggravating circumstances. Article 27(4) of that Directive requires Member States to base any imposed pecuniary penalties on the net worldwide turnover of the company concerned. However, given the fact thatMember States already have to take into account the series of factors laid down in Article 27(2) of that directive, the need to basepecuniary penalties onthe net worldwide turnover of the company concerned is superfluous. However, to ensure a level playing field across the Union, Member States should be prohibited from introducing in their national law a ceiling or cap for any pecuniary penalties imposed oncompanies under their jurisdiction that would prevent supervisory authorities from imposing penalties in accordance with the factors laid down inArticle 27(2). Moreover, to harmonise enforcement practices across the Union, the Commission, in collaboration with the Member States, should develop guidelines to assist supervisory authorities in determining the level of penalties.

(27) Article 27(1) of Directive EU 2024/1760 requires Member States to lay down penalties that are to be "effective, proportionate and dissuasive". Article 27(2) of that Directive requires Member States, when deciding whether to impose penalties and, if so, when determining their nature and appropriate level, to take due account of a series of factors that determine the gravity of the infringement and attenuating or aggravating circumstances. Article 27(4) of that Directive requires Member States to base any imposed pecuniary penalties on the net worldwide turnover of the company concerned. In order to ensure proportionate penalties,Member States should guarantee that the maximum limit forpecuniary penalties is set at 5% ofthe net worldwide turnover of the company or, forcompanies fallingunder Article 2(1)(b) andArticle 2(2)(b), of the consolidated worldwide turnover of the ultimate parent undertaking, in the financial year preceding that of the decision to impose the fine. Moreover, to harmonise enforcement practices across the Union, the Commission, in collaboration with the Member States, should develop guidelines to assist supervisory authorities in determining the appropriatelevel of penalties.

Text proposed by the Commission

Amendment

(29 a) In order to facilitate compliance by companies with reporting and due diligence obligations under Union law, and to enhance the accessibility and usability of sustainability-related information, the Commission should establish a dedicated digital reporting portal. That portal should serve as a one-stop shop, providing companies, free of charge, with tailored access to templates, guidelines, reporting requirements, including voluntary tools, and information on funding and tendering opportunities. To ensure the effective functioning of the portal, the Commission should promote the interoperability of existing data platforms, enabling seamless transmission, exchange and analysis of data, as well as complementarity with the European Single Access point. Furthermore, and in view of the rapid technological developments, the Commission should assess the potential of technological solutions, including the use of trustworthy artificial intelligence in accordance with Regulation (EU) 2024/1689 of the European Parliament and of the Council1to support the digitalisation of reporting and improve the quality and accessibility of sustainability-related data.

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1 Regulation (EU) 2024/1689 of the European Parliament and of the Council of 13 June 2024 laying down harmonised rules on artificial intelligence and amending Regulations (EC) No 300/2008, (EU) No 167/2013, (EU) No 168/2013, (EU) 2018/858, (EU) 2018/1139 and (EU) 2019/2144 and Directives 2014/90/EU, (EU) 2016/797 and (EU) 2020/1828 (Artificial Intelligence Act) (OJ L, 2024/1689, 12.7.2024).

Text proposed by the Commission

Amendment

The Commission shall be empowered toadopt delegated acts in accordance with Article 48a in order to supplement this Directive in order to provide for limited assurance standards setting out the procedures that the auditor(s) and the audit firm(s) shall perform in order to draw his, her or its conclusions on the assurance of sustainability reporting, including engagement planning, risk consideration and response to risks and type of conclusions to be included in the assurance report on sustainability reporting, or, where relevant, in the audit report.

The Commission shall, no later than 1 October 2026,adopt delegated acts in accordance with Article 48a in order to supplement this Directive in order to provide for limited assurance standards setting out the procedures that the auditor(s) and the audit firm(s) shall perform in order to draw his, her or its conclusions on the assurance of sustainability reporting, including engagement planning, risk consideration and response to risks and type of conclusions to be included in the assurance report on sustainability reporting, or, where relevant, in the audit report.

Text proposed by the Commission

Amendment

The Commission mayadopt the assurance standards referred to in the first subparagraph only where thosestandards:

The Commission shalladopt the assurance standards referred to in the first subparagraph after having obtained an opinion from EFRAG while ensuring that thestandards:

Text proposed by the Commission

Amendment

'The coordination measures prescribed by Articles 19a, 19b, 29a, 29aa, 29d, 30 and 33, Article 34(1), second subparagraph, point (aa), Article 34(2) and (3), 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 regardless of their legal form, provided that those undertakings are large undertakings which, on their balance sheet dates, exceedthe average number of 1000 employees during the financial year:';

'The coordination measures prescribed by Articles 19a, 19b, 29a, 29aa, 29d, 30 and 33, Article 34(1), second subparagraph, point (aa), Article 34(2) and (3), 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 regardless of their legal form, provided that those undertakings exceed, on their balance sheet dates, the average number of 1000 employees and a net turnover of EUR 450 000 000during the financial year:';

Text proposed by the Commission

Amendment

(1 a) in Article 19(1), the fourth subparagraph is replaced by the following:

'Undertakings which, on their balance sheet dates, exceed the average number of 1000 employees and a net turnover of EUR 450 000 000 during the financial year, shall report information on the key intangible resources and explain how the business model of the undertaking fundamentally depends on such resources and how such resources are a source of value creation for the undertaking.' ;

Text proposed by the Commission

Amendment

'Largeundertakings which, on their balance sheet dates, exceed the average number of 1000 employees during the financial year shall include in their 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.';

'Undertakings which, on their balance sheet dates, exceed the average number of 1000 employees and a net turnover of EUR 450 000 000during the financial year shall include in their 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.';

Text proposed by the Commission

Amendment

(a a) in paragraph 1, the following subparagraph is added:

'Undertakings that are a financial holding undertaking as defined in Article 2(15), shall be exempted from carrying out the obligations under this Directive.';

Text proposed by the Commission

Amendment

'Where applicable, the information referred to in paragraphs 1 and 2 shall contain information about the undertaking's own operations and about its value chain, including its products and services, its business relationships and its supply chain. Member States shall ensure that, for the reporting of sustainability information as required by this Directive, undertakings do not seek to obtain from undertakings in their value chain which, on their balance sheet dates, do not exceed the average number of 1000 employees during the financial year any information that exceeds the information specified in the standards for voluntary use referred to in Article 29ca, except for additional sustainability information that is commonly shared between undertakings in the sector concerned. Undertakings that report the necessary value chain information without reporting from undertakings in their value chain which, on their balance sheet dates, do not exceed the average number of 1000 employees during the financial year any information that exceeds the information specified in the standards for voluntary use referred to in Article 29ca, except for additional sustainability information that is commonly shared between undertakings in the sector concerned, shall be deemed to have complied with the obligation to report value chain information set out in this paragraph.';

'Where applicable, the information referred to in paragraphs 1 and 2 shall contain information about the undertaking's own operations and about its value chain, including its products and services, its business relationships and its supply chain. Member States shall ensure that, for the reporting of sustainability information as required by this Directive, undertakings do not seek to obtain from undertakings in their value chain which, on their balance sheet dates, do not exceed the average number of 1000 employees and a net turnover of EUR 450 000 000during the financial year any information that exceeds the information specified in the standards for voluntary use referred to in Article 29ca, except for additional sustainability information that is commonly shared between undertakings in the sector concerned. Undertakings that report the necessary value chain information without reporting from undertakings in their value chain which, on their balance sheet dates, do not exceed the average number of 1000 employees and a net turnover of EUR 450 000 000during the financial year any information that exceeds the information specified in the standards for voluntary use referred to in Article 29ca, except for additional sustainability information that is commonly shared between undertakings in the sector concerned, shall be deemed to have complied with the obligation to report value chain information set out in this paragraph.';

Present text

Amendment

(i a) the second subparagraph is replaced by the following:

For the first three years of the application of the measures to be adopted by the Member States in accordance with Article 5(2) of Directive (EU) 2022/2464 of the European Parliament and of the Council (13), and inthe event that not all the necessary information regarding its value chain is available, the undertaking shall explain the efforts made to obtain the necessary information about its value chain, the reasons why not all of the necessary information could be obtained, and its plans to obtain the necessary information in the future.

'In the event that not all the necessary information regarding its value chain is available, the undertaking shall explain the efforts made to obtain the necessary information about its value chain, the reasons why not all of the necessary information could be obtained, and, its plans to obtain the necessary information in the future. If an information regarding its value chain cannot be obtained because the legal framework of a third country prevents a business partner to do so, the undertaking shall inform the supervisory authority which, in turn, shall inform the Commission. Where possible, the undertaking shall replace the information that could not be obtained by a default value, which represents an estimation of the average value for an indicator for a specific country and sector. Each reporting exercise, the undertaking shall reassess whether the use of the default value is still needed and if the information regarding its value chain can be obtained instead.';

Text proposed by the Commission

Amendment

'The first subparagraph is without prejudice to Union requirements on undertakings to conduct a due diligence process.';

'The first subparagraph is without prejudice to information requests made for purposes other than the reporting of sustainability information as required by this Directive, includingUnion requirements on undertakings to conduct a due diligence process.';

Text proposed by the Commission

Amendment

(b a) the following paragraph 4a is inserted:

'4a. The reporting obligations set out in this Article are without prejudice to Directive (EU) 2016/943 of the European Parliament and of the Council. Therefore, undertakings shall not be required to disclose information on intellectual capital, intellectual property or know-how, business information or technological information which constitutes trade secrets as defined in Article 2, point (1), of Directive (EU) 2016/943.';

Present text

Amendment

(c a) paragraph 10 is replaced by the following:

'10. The exemption laid down in paragraph 9 shall also apply to public-interest entities subject to the requirements of this Article, with the exception of large undertakings which are public-interest entities defined in point (a) of point (1) of Article 2 of this Directive.';

'10. The exemption laid down in paragraph 9 shall also apply to public-interest entities subject to the requirements of this Article.';

Text proposed by the Commission

Amendment

(3) the following Article 19b is inserted :

deleted

[...]

Text proposed by the Commission

Amendment

'Parent undertakings of a largegroup which, on their balance sheet dates, exceed the average number of 1000 employees, on a consolidated basis, during the financial year, shall include in the consolidated management report information necessary to understand the group's impacts on sustainability matters, and information necessary to understand how sustainability matters affect the group's development, performance and position.';

'Parent undertakings of a group which, on their balance sheet dates, exceed the average number of 1000 employees and a net turnover of EUR 450 000 000, on a consolidated basis, during the financial year, shall include in the consolidated management report information necessary to understand the group's impacts on sustainability matters, and information necessary to understand how sustainability matters affect the group's development, performance and position.';

Text proposed by the Commission

Amendment

(a a) in paragraph 1, the following subparagraphs are added:

'Parent undertakings that are a financial holding undertaking as defined in Article 2(15), shall be exempted from carrying out the obligations under this Article.

In case of recent acquisitions of subsidiaries that are not subject to the reporting of information referred to in the first subparagraph, the parent undertaking will benefit of a 24 months transition period before being required to integrate information on its new subsidiary, within its consolidated sustainability report.';

Text proposed by the Commission

Amendment

Where applicable, the information referred to in paragraphs 1 and 2 shall contain information about the group's own operations and about its value chain, including its products and services, its business relationships and its supply chain. Member States shall ensure that, for the reporting of sustainability information as required by this Directive, undertakings do not seek to obtain from undertakings in their value chain which, on their balance sheet dates, do not exceed the average number of 1000 employees during the financial year any information that exceeds the information specified in the standards for voluntary use referred to in Article 29ca, except for additional sustainability information that is commonly shared between undertakings in the sector concerned. Undertakings that report the necessary value chain information without reporting from undertakings in their value chain which, on their balance sheet dates, do not exceed the average number of 1000 employees during the financial year any information that exceeds the information specified in the standards for voluntary use referred to in Article 29ca, except for additional sustainability information that is commonly shared between undertakings in the sector concerned, shall be deemed to have complied with the obligation to report value chain information set out in this paragraph.;

'Where applicable, the information referred to in paragraphs 1 and 2 shall contain information about the group's own operations and about its value chain, including its products and services, its business relationships and its supply chain. Member States shall ensure that, for the reporting of sustainability information as required by this Directive, undertakings do not seek to obtain from undertakings in their value chain which, on their balance sheet dates, do not exceed the average number of 1000 employees and a net turnover of EUR 450 000 000during the financial year any information that exceeds the information specified in the standards for voluntary use referred to in Article 29ca, except for additional sustainability information that is commonly shared between undertakings in the sector concerned. Undertakings that report the necessary value chain information without reporting from undertakings in their value chain which, on their balance sheet dates, do not exceed the average number of 1000 employees and a net turnover of EUR 450 000 000during the financial year any information that exceeds the information specified in the standards for voluntary use referred to in Article 29ca, except for additional sustainability information that is commonly shared between undertakings in the sector concerned, shall be deemed to have complied with the obligation to report value chain information set out in this paragraph.';

Present text

Amendment

(i a) the second subparagraph is replaced by the following:

'For the first three years of the application of the measures to be adopted by the Member States in accordance with Article 5(2) of Directive (EU) 2022/2464, and inthe event that not all the necessary information regarding its value chain is available, the parentundertaking shall explain the efforts made to obtain the necessary information about its value chain, the reasons why not all of the necessary information could be obtained, and its plans to obtain the necessary information in the future.';

'Inthe event that not all the necessary information regarding its value chain is available, the undertaking shall explain the efforts made to obtain the necessary information about its value chain, the reasons why not all of the necessary information could be obtained, and its plans to obtain the necessary information in the future. If an information regarding its value chain cannot be obtained because the legal framework of a third country prevents a business partner to do so, the undertaking shall inform the supervisory authority which, in turn, shall inform the Commission. Where possible, the undertaking shall replace the information that could not be obtained by a default value, which represents an estimation of the average value for an indicator for a specific country and sector. Each reporting exercise, the undertaking shall reassess whether the use of the default value is still needed and if the information regarding its value chain can be obtained instead.';

Text proposed by the Commission

Amendment

'The first subparagraph is without prejudice to Union requirements on undertakings to conduct a due diligence process.';

'The first subparagraph is without prejudice to information requests made for purposes other than the reporting of sustainability information as required by this Directive, includingUnion requirements on undertakings to conduct a due diligence process.';

Text proposed by the Commission

Amendment

(b a) the following subparagraph 5a is added:

'5a. The reporting obligations set out in this Article are without prejudice to Directive (EU) 2016/943. Therefore, undertakings shall not be required to disclose information on intellectual capital, intellectual property or know-how, business information or technological information which constitutes trade secrets as defined in Article 2, point (1), of Directive (EU) 2016/943.';

Present text

Amendment

(b b) in paragraph 8, the first subparagraph is replaced by the following:

'Provided that the conditions set out in the second subparagraph of this paragraph are met, a parent undertaking which is a subsidiary undertaking shall be exempted from the obligations set out in paragraphs 1 to 5 of this Article (the "exempted parent undertaking") if such parent undertaking and its subsidiary undertakings are included in the consolidated management report of another undertaking, drawn up in accordance with Article 29 and this Article. A parent undertaking which is a subsidiary undertaking of a parent undertaking that is established in a third country shall also be exempted from the obligations set out in paragraphs 1 to 5 of this Article where such parent undertaking and its subsidiary undertakings are included in the consolidated sustainability reporting of that parent undertaking that is established in a third country and where that consolidated sustainability reporting is carried out in accordance with the sustainability reporting standards adopted pursuant to Article 29b or in a manner equivalent to those sustainability reporting standards, as determined in accordance with an implementing act on the equivalence of sustainability reporting standards adopted pursuant to the third subparagraph of Article 23(4) of Directive 2004/109/EC.

'Provided that the conditions set out in the second subparagraph of this paragraph are met, a parent undertaking which is a subsidiary undertaking shall be exempted from the obligations set out in paragraphs 1 to 5 of this Article (the "exempted parent undertaking") if such parent undertaking and its subsidiary undertakings are included in the consolidated management report of another undertaking, drawn up in accordance with Article 29 and this Article. A parent undertaking which is a subsidiary undertaking of a parent undertaking that is established in a third country shall also be exempted from the obligations set out in paragraphs 1 to 5 of this Article where:

(i) such parent undertaking and its subsidiary undertakings are included in the consolidated sustainability reporting of that parent undertaking that is established in a third country and where that consolidated sustainability reporting is carried out in accordance with the sustainability reporting standards adopted pursuant to Article 29b or in a manner equivalent to those sustainability reporting standards, as determined in accordance with an implementing act on the equivalence of sustainability reporting standards adopted pursuant to the third subparagraph of Article 23(4) of Directive 2004/109/EC;

(ii) the parent undertaking is a financial holding undertaking in accordance with Article 2(15), that does not have any subsidiaries in the Union with an operating business.';

Present text

Amendment

(b c) paragraph 9 is replaced by the following:

'9. The exemption laid down in paragraph 8 shall also apply to public-interest entities subject to the requirements of this Article, with the exception of large undertakings which are public-interest entities defined in point (a) of point (1) of Article 2 of this Directive.';

'9. The exemption laid down in paragraph 8 shall also apply to public-interest entities subject to the requirements of this Article.';

Text proposed by the Commission

Amendment

(5) The following Article 29aa is inserted :

deleted

[...]

Text proposed by the Commission

Amendment

(-a) in paragraph 1, the following subparagraph is inserted after the second subparagraph:

'The Commission, after consultation with relevant stakeholders, shall develop voluntary sector-specific guidelines to assist undertakings in the same sector in conducting their materiality assessment. These guidelines shall provide tailored support for identifying and disclosing sector-relevant sustainability impacts, risks, and opportunities, ensuring consistency and comparability across companies operating in the same sector.';

Text proposed by the Commission

Amendment

(a) in paragraph 1, the third andfourth subparagraphs are deleted;

(a) in paragraph 1, the third,fourth and sixthsubparagraphs are deleted;

Present text

Amendment

(a a) in paragraph 2, the first subparagraph is replaced by the following:

The sustainability reporting standards shall ensure the quality of reported information, by requiring that it is understandable, relevant, verifiable, comparable and represented in a faithful manner. The sustainability reporting standards shall avoid imposing a disproportionate administrative burden on undertakings, including by taking account,to the greatest extent possible, of the work of global standard-setting initiatives for sustainability reporting as required by point (a) of paragraph 5.

'The sustainability reporting standards shall ensure the quality of reported information, by requiring that it issimple, accessible, streamlined, understandable, proportionate, relevant, verifiable, comparable and represented in a faithful manner. The sustainability reporting standards shall:

(a) to the extent possible, be quantitative in nature;

(b) avoid double reporting and any overlap with obligations stemming from other legislative instruments;

(c) avoid imposing a disproportionate administrativeand financial burden on undertakings; and

(d) ensure to the greatest extent possible interoperability with internationally recognised standards set byglobal standard-setting initiatives for sustainability reporting as required by point (a) of paragraph 5.';

Text proposed by the Commission

Amendment

(b) in paragraph 4, first subparagraph is replaced by the following

(b) in paragraph 4, thefirst subparagraph is replaced by the following

'Sustainability reporting standards shall not specify disclosures that would require undertakings to obtain from undertakings in their value chain which, on their balance sheet dates, do not exceed the average number of 1000 employees during the financial year any information that exceeds the information to be disclosed pursuant to the sustainability reporting standards for voluntary use referred to in Article 29ca.';

'Sustainability reporting standards shall take account of the difficulties, including legal limitations stemming from this Directive, that undertakings might encounter in gathering information from actors throughout their value chain, especially from those which are not subject to the sustainability reporting requirements laid down in Article 19a or 29a and from suppliers in emerging markets and economies. Sustainability reporting standards shall specify disclosures on value chains that are proportionate and relevant to the capacities and characteristics of undertakings in the value chains, and to the scale and complexity of their activities, especially those of undertakings that are not subject to the sustainability reporting requirements laid down in Article 19a or 29a.Sustainability reporting standards shall not specify disclosures that would require undertakings to obtain from undertakings in their value chain which, on their balance sheet dates, do not exceed the average number of 1000 employees and a net turnover of EUR 450 000 000during the financial year any information that exceeds the information to be disclosed pursuant to the sustainability reporting standards for voluntary use referred to in Article 29ca.';

Text proposed by the Commission

Amendment

1. To facilitate voluntary reporting of sustainability information by undertakings other than those referred to in Articles 19a(1) and 29a(1), the Commission shall adopt a delegated act by [4 months after entry into force of this Directive] in accordance with Article 49 supplementing this Directive to provide for sustainability reporting standards for voluntary use by such undertakings.

1. To facilitate voluntary reporting of sustainability information by undertakings other than those referred to in Articles 19a(1) and 29a(1) and to limit the information that can be requested from such undertakings for the purposes of this Directive, the Commission shall adopt a delegated act by [4 months after entry into force of this Directive] in accordance with Article 49 supplementing this Directive to provide for sustainability reporting standards for voluntary use by such undertakings.

Text proposed by the Commission

Amendment

2. The sustainability reporting standards referred to in paragraph 1 shall be proportionate to andrelevant for the capacities and the characteristics of the undertakings for which they are designed and to the scale and complexity of their activities. They shall also, to the extent possible, specify the structure to be used to present such sustainability information.;

2. The sustainability reporting standards referred to in paragraph 1 shall be based on Commission Recommendation 2025/4984 andproportionate to the size of the undertakings, and berelevant for the capacities and the characteristics of the undertakings for which they are designed and to the scale and complexity of their activities. They shall also, to the extent possible, specify the structure to be used to present such sustainability information. Undertakings within the value chain may choose a template for reporting of sustainability information, so that undertakings requesting information are not required to assess or map the size categories of all entities in their value chain.

Text proposed by the Commission

Amendment

3. The Commission shall, at least every four years after the date of its application, review the delegated act referred to in paragraph 1 and, where necessary, it shall amend it to take into account developments relevant to sustainability reporting.

Text proposed by the Commission

Amendment

4. When amending delegated acts pursuant to paragraph 3, the Commission shall take into consideration technical advice from EFRAG.';

Text proposed by the Commission

Amendment

By way of derogation from subparagraph 1, Member States shall ensurethat the members of the administrative, management and supervisory bodies of an undertaking, acting within the competences assigned to them by national law, do not have collective responsibility for ensuring that the management report, or consolidated management report, where applicable, is prepared in accordance with Article 29d.';

By way of derogation from subparagraph 1, Member States may providethat the members of the administrative, management and supervisory bodies of an undertaking, acting within the competences assigned to them by national law, do not have collective responsibility for ensuring that the management report, or consolidated management report, where applicable, is prepared in accordance with Article 29d.';

Text proposed by the Commission

Amendment

'2a. Member States shall ensure that the opinion referred to in paragraph 1, second subparagraph, point (aa), is prepared in full respect of the obligation on undertakings not to seek to obtain from undertakings in their value chain which, on their balance sheet dates, do not exceed the average number of 1000 employees during the financial year any information that exceeds the information specified in the standards for voluntary use referred to in Article 29ca, except for additional sustainability information that is commonly shared between undertakings in the sector concerned.';

'2a. Member States shall ensure that the opinion referred to in paragraph 1, second subparagraph, point (aa), is prepared in full respect of the obligation on undertakings not to seek to obtain from undertakings in their value chain which, on their balance sheet dates, do not exceed the average number of 1000 employees and a net turnover of EUR 450 000 000during the financial year any information that exceeds the information specified in the standards for voluntary use referred to in Article 29ca, except for additional sustainability information that is commonly shared between undertakings in the sector concerned.';

Text proposed by the Commission

Amendment

(b a) the following paragraph 2b is inserted:

'2b. Member States shall ensure that the opinion referred to in paragraph 1, second subparagraph, point (aa), is prepared in full respect of the possibility of undertakings in the value chain to omit to provide information in exceptional cases where an undertaking established under legislation of a third-country could be sanctioned due to third-country legislation simply by transmitting sustainability data.';

Present text

Amendment

(- a) the first subparagraph is replaced by the following:

'A Member State shall require that a subsidiary undertaking established in its territory whose ultimate parent undertaking is governed by the law of a third country publish and make accessible a sustainability report covering the information specified in points (a)(iii) to (a)(v), points (b) to (f) and, where appropriate, point (h) of Article 29a (2) at the group level of that ultimate third-country parent undertaking.';

'A Member State shall require that a subsidiary undertaking established in its territory whose ultimate parent undertaking is governed by the law of a third country publish and make accessible a sustainability report covering the information specified in points (a)(iii) to (a)(v), points (b) to (f) and, where appropriate, point (h) of Article 29a (2), and in accordance with Article 29a(3), at the group level of that ultimate third-country parent undertaking.';

Text proposed by the Commission

Amendment

'The first subparagraph shall only apply to largesubsidiary undertakings as defined in Article 3(4) of this Directive.';

'The first subparagraph shall only apply to subsidiary undertakings which, on their balance sheet dates, exceed a net turnover of EUR 450 000 000 in the preceding financial year.';

Text proposed by the Commission

Amendment

(b) the fourth and fifth subparagraphs arereplaced by the following:

(b) the fourth subparagraph isreplaced by the following:

'The rule referred to in the third subparagraph shall only apply to a branch where the third-country undertaking does not have a subsidiary undertaking as referred to in the first subparagraph, and where the branch generated a net turnover exceeding the threshold referred to in Article 3(4) point (b) of this Directivein the preceding financial year.

'The rule referred to in the third subparagraph shall only apply to a branch where the third-country undertaking does not have a subsidiary undertaking as referred to in the first subparagraph, and where the branch generated a net turnover exceeding EUR 450 000 000in the preceding financial year.

Text proposed by the Commission

Amendment

(ba) the fith subparagraph is deleted

The first and third subparagraphs shall only apply to the subsidiary undertakings or branches referred to in those subparagraphs where the third-country undertaking, at its group level, or, if not applicable, the individual level, generated a net turnover in the Union exceeding EUR 450 000 000 for each of the last two consecutive financial years.';

Text proposed by the Commission

Amendment

(-a) in paragraph 2, first sentence, the reference to Article 29c is deleted;

Text proposed by the Commission

Amendment

(-aa) in paragraph 3, first sentence, the reference to Article 29c is deleted;

Text proposed by the Commission

Amendment

(-ab) paragraph 3b is amended as follows:

(i) in the first subparagraph, introductory wording, the reference to Article 29c is deleted ;

(ii) in the fourth subparagraph, the reference to Article 29c is deleted;

(iii) in the sixth subparagraph, the reference to Article 29c is deleted.

Text proposed by the Commission

Amendment

(a) the following paragraphs 3c to 3eare inserted:

(a) the following paragraphs 3c and 3dare inserted:

Text proposed by the Commission

Amendment

'3c. The power to adopt delegated acts referred to in Articles 19b(5), 29aa(5) and29ca shall be conferred on the Commission for an indeterminate period from [date of entry into force of amending Directive].

'3c. The power to adopt delegated acts referred to in Article29ca shall be conferred on the Commission for an indeterminate period from [date of entry into force of amending Directive].

Text proposed by the Commission

Amendment

3d. The delegations of powers referred to in Articles 19b(5), 29aa(5) and29ca may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.

3d. The delegations of powers referred to in Article29ca may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.

Text proposed by the Commission

Amendment

3e. The Commission shall gather all necessary expertise, prior to the adoption and during the development of delegated acts pursuant to Articles 19b(5) and 29aa(5), including through the consultation of the experts of the Member State Expert Group on Sustainable Finance referred to in Article 24 of Regulation (EU) 2020/852.';

deleted

Text proposed by the Commission

Amendment

'5. A delegated act adopted pursuant to Article 1(2), Article 3(13), Article 19b, Article 29aa, Articles 29b, 29ca or 40b, or Article 46(2) shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or the Council.'.

'5. A delegated act adopted pursuant to Article 1(2), Article 3(13), Articles 29b, 29ca or 40b, or Article 46(2) shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or the Council.'.

Text proposed by the Commission

Amendment

'(i) to largeundertakings which, on their balance sheet dates, exceed the average number of 1000 employees during the financial year;';

'(i) to undertakings which, on their balance sheet dates, exceed the average number of 1000 employees and a net turnover of EUR 450 000 000during the financial year;';

Text proposed by the Commission

Amendment

'(ii) to parent undertakings of a largegroup which, on their balance sheet dates, exceed the average number of 1000 employees, on a consolidated basis, during the financial year;';

'(ii) to parent undertakings of a group which, on their balance sheet dates, exceed the average number of 1000 employees and a net turnover of EUR 450 000 000, on a consolidated basis, during the financial year;';

Text proposed by the Commission

Amendment

'(i) to issuers as defined in Article 2(1), point (d) of Directive 2004/109/EC which are largeundertakings within the meaning of Article 3(4) of Directive 2013/34/EUwhich, on their balance sheet dates, exceed the average number of 1000 employees during the financial year;';

'(i) to issuers as defined in Article 2(1), point (d) of Directive 2004/109/EC which are undertakings which, on their balance sheet dates, exceed the average number of 1000 employees and a net turnover of EUR 450 000 000during the financial year;';

Text proposed by the Commission

Amendment

'(ii) to issuers as defined in Article 2(1), point (d) of Directive 2004/109/EC which are parent undertakings of a largegroup which, on its balance sheet dates, exceed the average number of 1000 employees , on a consolidated basis, during the financial year;';

'(ii) to issuers as defined in Article 2(1), point (d) of Directive 2004/109/EC which are parent undertakings of a group which, on its balance sheet dates, exceed the average number of 1000 employees and a net turnover of EUR 450 000 000, on a consolidated basis, during the financial year;';

Text proposed by the Commission

Amendment

'(c) the obligation for companies to adopt a transition plan for climate change mitigation, including implementing actionswhich aim to ensure, through bestefforts, compatibility of the business model and of the strategy of the company with the transition to a sustainable economy and with the limiting of global warming to 1,5 oCin line with the Paris Agreement.';

'(c) the obligation for companies to adopt a transition plan for climate change mitigation, which aim to ensure, through reasonableefforts, compatibility of the business model and of the strategy of the company with the transition to a sustainable economy and with the limiting of global warming in line with the Paris Agreement.';

Present text

Amendment

(1 a) Article 2 is amended as follows:

(a) in paragraph 1, point (a) is replaced by the following:

'(a) the company had more than 1 000employees on average and had a net worldwide turnover of more than EUR 450 000 000in the last financial year for which annual financial statements have been or should have been adopted;';

'(a) the company had more than5 000 employees on average and had a net worldwide turnover of more than EUR1.5 billion in the last financial year for which annual financial statements have been or should have been adopted ;';

Present text

Amendment

(b) in paragraph 2, point (a) is replaced by the following:

'(a) the company generated a net turnover of more than EUR 450 000 000in the Union in the financial year preceding the last financial year;';

'(a) the company generated a net turnover of more than EUR1.5 billion in the Union in the financial year preceding the last financial year;';

Text proposed by the Commission

Amendment

(2) inArticle 3(1), point (n) isreplaced by the following:

(2) Article 3(1) isamended as follows:

Text proposed by the Commission

Amendment

(a) point (n) is replaced by the following:

'(n) 'stakeholders' means the company's employees, the employees of its subsidiaries and of its business partners, and their trade unions and workers' representatives, and individuals or communities whose rights or interests are or could be directly affected by the products, services and operations of the company, its subsidiaries and its business partners and the legitimate representatives of those individuals or communities;';

'(n) 'stakeholders' means the company's employees, the employees of its subsidiaries and of its business partners, and their trade unions and workers' representatives, and individuals or communities whose rights or interests are or could be directly affected by the adverse impacts on human rights and the environment that stem from theproducts, services and operations of the company, its subsidiaries and its business partners and the legitimate representatives of those individuals or communities;';

Text proposed by the Commission

Amendment

(b) the following point (w) is added:

'(w) 'reasonably available information' means information which can be obtained by the company from its own, or from existing or secondary sources without contacting a business partner.';

Text proposed by the Commission

Amendment

(3) Article 4 is replaced by the following:

(3) Article 4 is amended as follows:

Text proposed by the Commission

Amendment

(a) paragraph 1 is replaced by the following:

1. Without prejudice to Article 1(2) and (3), Member States shall not introduce, in their national law, provisions within the field covered by this Directive laying down human rights and environmental due diligence obligationsdiverging from those laid down in Articles 6and 8, Article 10(1) to (5), Article 11(1) to (6) and Article 14.

Without prejudice to Article 1(2) and (3), Member States shall not introduce, in their national law, provisions within the field covered by this Directive diverging from those laid down in Articles 6 to 16

Text proposed by the Commission

Amendment

(b) paragraph 2 is deleted;

2. Notwithstanding paragraph 1, this Directive shall not preclude Member States from introducing, in their national law, more stringent provisions diverging from those laid down in provisions other than Articles 6 and, 8, Article 10(1) to (5), Article 11(1) to (6) and Article 14, or provisions that are more specific in terms of the objective or the field covered, including by regulating specific products, services or situations, in order to achieve a different level of protection of human, employment and social rights, the environment or the climate.;

Text proposed by the Commission

Amendment

3 a. in Article 6 the following paragraph 4 is added:

'4. When a company covered by this Directive acquires a company that was not in the scope of this Directive, the acquiring company has two years to integrate the processes of the purchased company into its own due diligence policy.';

Text proposed by the Commission

Amendment

(a) inparagraph 2, point (b)is replaced by the following:

(a) paragraph 2 is replaced by the following:

'2. As part of the obligation set out in paragraph 1, and adopting a risk-based approach that takes into account relevant risk factors, including geographical and contextual risk factors, such as the level of law enforcement; sectoral, product or service risk factors, as well as business operation or business partners risk factors, such as whether the business partner is not a company covered by this Directive, companies shall take appropriate measures to:

(a) carry out a scoping, based on reasonably available information, to identify general areas across their own operations, those of their subsidiaries and, where related to their chains of activities, those of their business partners where adverse impacts are most likely to occur and to be most severe;

(b) based on the results of the mapping asreferred to in point (a), carry out and in-depthassessment of their own operations, those of their subsidiaries and, where related to their chains of activities, those of their direct business partners,in the areas where adverse impacts were identified to be most likely to occur and most severe.;

(b) based on the results of the scopingreferred to in point (a), and where, on the basis of relevant and verifiable information, the company has grounds to believe that adverse impacts have arisen or may arise,carry out a furtherassessment onlyin the areas where adverse impacts were identified to be most likely to occur and to bemost severe. Companies shall not be required to request any information from business partners, where no likely and severe risks were identified. Companies shall be able to prioritise assessing direct business partners, in line with severity and likelihood of the adverse impacts.';

Text proposed by the Commission

Amendment

(b) the following paragraph 2a is inserted:

deleted

2a. Where a company has plausible information that suggests that adverse impacts at the level of the operations of an indirect business partner have arisen or may arise, it shall carry out an in-depth assessment. The company shall always carry out such an assessment where the indirect, rather than direct, nature of the relationship with the business partner is the result of an artificial arrangement that does not reflect economic reality but points to a circumvention of paragraph 2, point (b). Where the assessment confirms the likelihood or existence of the adverse impact, it is deemed to have been identified.

The first subparagraph is without prejudice to the company considering available information about indirect business partners and whether those business partners can follow the rules and principles set out in the company's code of conduct when selecting a direct business partner.

Notwithstanding the first subparagraph, irrespective of whether plausible information is available about indirect business partners, a company shall seek contractual assurances from a direct business partner that that business partner will ensure compliance with the company's code of conduct by establishing corresponding contractual assurances from its business partners. Article 10(2), points (b) and (e) shall apply accordingly.';

Text proposed by the Commission

Amendment

(b a) paragraph 3 is replaced by the following:

3. Member States shall ensure that, for the purposes of identifying and assessing the adverse impacts referred toin paragraph 1 based on, where appropriate, quantitative and qualitative information,companies are entitled to make use of appropriate resources, including independent reports and informationgathered through the notification mechanism and the complaints procedure provided for in Article 14.

'3. Member States shall ensure that, for the purposes ofthe scoping provided for in paragraph 2, point (a), companiesdo not seek to obtain the information from their business partners but rely solely on informationthat is already reasonably available, including risk factors.';

Text proposed by the Commission

Amendment

'4. Where information necessaryfor the in-depthassessment provided for in paragraph 2, point (b), andin paragraph 2acan be obtained from different business partners, the company shall prioritise requestingsuch information, where reasonable, directly from the business partner or partners where the adverse impacts are most likely to occur.';

'4. Member States shall ensure that,for the purposes of the furtherassessment provided for in paragraph 2, point (b), of this Article companies do not seek to obtain information from business partners, unless this is necessary. Where the business partner has fewer than 5000 employees, companies may seek such information only as a last resort, and if it cannot reasonably be obtained by other means, in particular from existing or secondary sources. In any case, any request shall be targeted, reasonable and proportionate.

Where information necessary for the further assessment provided forin paragraph 2, point (b)can be obtained from different business partners, the company shall seeksuch information, where reasonable, directly from the business partner or partners where the adverse impacts are most likely to occur. Information may be sought individually or collaboratively.';

Text proposed by the Commission

Amendment

'5. Member States shall ensure that, for the mappingprovided for in paragraph 2, point (a), companies do not seek to obtain information from direct business partners with fewer than 500 employees that exceeds the information specified in the standards for voluntary use referred to inArticle 29a of Directive 2013/34/EU.';

'5. Member States shall ensure that, for the purposes of identifying and assessing the adverse impacts referred to in paragraph 1 based on, where appropriate, quantitative and qualitative information, companies are entitled to make use of appropriate resources, including independent reports, digital solutions, industry or multi-stakeholders initiatives, collaboration and information gathered through the notification mechanism and the complaints procedureprovided for in Article 14.

By way of derogation to the first sub-paragraph, where additional information is necessary for the mapping provided for in paragraph 2, point (a), in light of indications of likelyadverse impacts or because the standardsdo not cover relevant impacts, and where such additionalinformation cannot reasonablybe obtained by other means, the company may seek such information from that business partner.';

Where, despite having taken appropriate measures to identifyadverse impacts, companiesdo not have all the necessary information regarding their chains of activities, they shall be able to reasonably explain why suchinformation cannot be obtained. If, as a result, they could not take appropriate measures to prevent, mitigate, bring to an end or minimise the adverse impact, they shall not be penalised.';

Present text

Amendment

4 a. Article 9 is replaced by the following :

Article 9

Article 9

Prioritisation of identified actual and potential adverse impacts

Prioritisation of identified actual and potential adverse impacts

1. Member States shall ensure that, where it is not feasible to prevent, mitigate, bring to an end or minimise all identified adverse impacts at the same time and to their full extent,companies prioritise adverse impacts identified pursuant to Article 8in order to fulfil the obligations laid down in Article 10 or 11.

1. Member States shall ensure that, where it is not feasiblefor companies to prevent, mitigate, bring to an end or minimise all adverse impactsidentified pursuant to Article 8, companies mayprioritise the most severe and most likelyadverse impacts in order to fulfil the obligations laid down in Article 10 or 11.

2. The prioritisation referred to in paragraph 1 shall be based on the severity and likelihood of the adverse impacts.

2. Once the most severe and most likely adverse impacts are addressed in accordance with Article 10 or 11 within a reasonable time, the company shall address less severe and less likely adverse impacts.

3. Once the most severe and most likely adverse impacts are addressed in accordance with Article 10 or 11 within a reasonable time, the company shall address less severe and less likelyadverse impacts.

3. Where prioritisation decisions are made in accordance with this Article, Member States shall ensure that companies are not penalised under Article 25 or 27 for any harm stemming from any less significant adverse impactsthat have not yet been addressed.';

Text proposed by the Commission

Amendment

(c) use or increase its leverage through the suspension of the business relationship with respect to the activities concerned.

(c) use or increase its leverage, where possible,through the temporarysuspension of the business relationship with respect to the activities concerned.

Text proposed by the Commission

Amendment

As long as there is a reasonable expectation that the enhanced prevention action plan will succeed, the mere fact of continuing to engage with the business partner shall not trigger the company'sliability.

As long as there is a reasonable expectation that the enhanced prevention action plan will succeed, the mere fact of continuing to engage with the business partner shall not expose the company to penalties pursuant to Article 27 or toliability under Article 29.

Text proposed by the Commission

Amendment

Prior to suspending a business relationship, the company shall assess whether the adverse impacts from doing so can be reasonably expected to be manifestly more severe than the adverse impact that could not be prevented or adequately mitigated. Should that be the case, the company shall not be required to suspend the business relationship and shall be in a position to report to the competent supervisory authority about the duly justified reasons for such decision.

Prior to temporarilysuspending a business relationship, the company shall assess in consultation with relevant stakeholders, whether no available alternative to that business relationship, that provides a raw material, product or service essential to the company's production of goods or provision of services, exists and the suspension would cause substantial prejudice to the company orwhether the adverse impacts from doing so can be reasonably expected to be manifestly more severe than the adverse impact that could not be prevented or adequately mitigated. Should that be the case, the company shall not be required to suspend the business relationship and shall be in a position to report to the competent supervisory authority about the duly justified reasons for such decision.

Text proposed by the Commission

Amendment

Member States shall provide for an option to suspend the business relationship in contracts governed by their laws in accordance with the first subparagraph, except for contracts where the parties are obliged by law to enter into them.

Member States shall provide for an option to suspend or terminatethe business relationship in contracts governed by their laws, except for contracts where the parties are obliged by law to enter into them.

Text proposed by the Commission

Amendment

'7. As regards actual adverse impacts as referred to in paragraph 1 that could not be prevented or adequately mitigatedby the measures set out in paragraphs 3, 5 and 6, the company shall, as a last resort:

'7. As regards actual adverse impacts as referred to in paragraph 1 that could not be brought to an end or the extent of which could not be minimisedby the measures set out in paragraphs 3, 5 and 6, the company shall, as a last resort:

Text proposed by the Commission

Amendment

(b) where the law governing its relation with the business partner concerned so entitles it, adopt and implement an enhanced preventionaction plan for the specific adverse impact without undue delay, provided that there is a reasonable expectation that those efforts will succeed, and

(b) where the law governing its relation with the business partner concerned so entitles it, adopt and implement an enhanced correctiveaction plan for the specific adverse impact without undue delay, provided that there is a reasonable expectation that those efforts will succeed, and

Text proposed by the Commission

Amendment

(c) use or increase its leverage through the suspension of the business relationship with respect to the activities concerned.

(c) use or increase its leverage, where possible,through the temporarysuspension of the business relationship with respect to the activities concerned.

Text proposed by the Commission

Amendment

As long as there is a reasonable expectation that the enhanced preventionaction plan will succeed, the mere fact of continuing to engage with the business partner shall not trigger the company'sliability.

As long as there is a reasonable expectation that the enhanced correctiveaction plan will succeed, the mere fact of continuing to engage with the business partner shall not expose the company to penalties pursuant to Article 27 or toliability pursuant to Article 29.

Text proposed by the Commission

Amendment

Prior to suspending a business relationship, the company shall assess whether the adverse impacts from doing so can be reasonably expected to be manifestly more severe than the adverse impact that could not be prevented oradequately mitigated. Should that be the case, the company shall not be required to suspend the business relationship and shall be in a position to report to the competent supervisory authority about the duly justified reasons for such decision.

Prior to temporarilysuspending a business relationship, the company shall assess, in consultation with relevant stakeholders, whether no available alternative to that business relationship, that provides a raw material, product or service essential to the company's production of goods or provision of services, exists and the suspension would cause substantial prejudice to the company, orwhether the adverse impacts from doing so can be reasonably expected to be manifestly more severe than the adverse impact that could not be brought to an end or the extent of which could not beadequately minimised. Should that be the case, the company shall not be required to suspend the business relationship and shall be in a position to report to the competent supervisory authority about the duly justified reasons for such decision.

Text proposed by the Commission

Amendment

Member States shall provide for an option to suspend the business relationship in contracts governed by their laws in accordance with the first subparagraph, except for contracts where the parties are obliged by law to enter into them.

Member States shall provide for an option to suspend or terminatethe business relationship in contracts governed by their laws, except for contracts where the parties are obliged by law to enter into them.

Text proposed by the Commission

Amendment

Where the company decides not to suspend the business relationship pursuant to this Article, it shall monitor the potentialadverse impact and periodically assess its decision and whether further appropriate measures are available.';

Where the company decides not to suspend the business relationship pursuant to this Article, it shall monitor the actualadverse impact and periodically assess its decision and whether further appropriate measures are available.';

Text proposed by the Commission

Amendment

'Such assessments shall be based, where appropriate, on qualitative and quantitative indicators and be carried out without undue delay after a significant change occurs, but at least every 5years and whenever there are reasonable grounds to believe that the measures are no longer adequate or effective or that new risks of the occurrence of those adverse impacts may arise.';

'Such assessments shall be based, where appropriate, on qualitative and quantitative indicators and be carried out without undue delay after a significant change occurs, but at least every 4years and whenever there are reasonable grounds to believe that the measures are no longer adequate or effective or that new risks of the occurrence of those adverse impacts may arise.';

Text proposed by the Commission

Amendment

'3. The guidelines referred to in paragraph 2, point (a), shall be made available by 26 July 2026, those referred to in paragraph 2, points (d) and (e), by 26 January 2027, and those referred to in paragraph 2, points (b), (f) and (g), by 26 July 2027.';

'3. The guidelines referred to in paragraph 2, point (a), (b) and (d) to (g)shall be made available by 26 July 2026.';

Text proposed by the Commission

Amendment

(10) inArticle 22(1), the first subparagraphis replaced by the following:

(10) Article 22is amended as follows:

Text proposed by the Commission

Amendment

(a) paragraph 1 is amended as follows:

'Member States shall ensure that companies referred to in Article 2(1), points (a), (b) and (c), and Article 2(2), points (a), (b) and (c), adopt a transition plan for climate change mitigation, including implementing actions,which aimto ensure, through bestefforts, that the business model and strategy of the company are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5°Cin line with the Paris Agreement and the objective of achieving climate neutrality as established in Regulation (EU) 2021/1119, including its intermediate and 2050 climate neutrality targets,and where relevant, the exposure of the company to coal-, oil- and gas-related activities.;

'1. Member States shall ensure that companies referred to in Article 2(1), points (a), (b) and (c), and Article 2(2), points (a), (b) and (c), adopt a transition plan for climate change mitigation, which aimsto ensure, through reasonableefforts, that the business model and strategy of the company are compatible with the transition to a sustainable economy and with the limiting of global warming in line with the Paris Agreement and the objective of achieving climate neutrality as established in Regulation (EU) 2021/1119, and where relevant, the exposure of the company to coal-, oil- and gas-related activities.';

Text proposed by the Commission

Amendment

(b) The following subparagraph is inserted after the first subparagraph:

'Reasonable efforts in the context of this Article shall be understood as taking proportionate and reasonable actions aiming to ensure compatibility with the transition to a sustainable economy in line with the Paris Agreement, without having to exhaust all possible means at their disposal. Member States shall ensure that the obligation laid down in this Article is an obligation of means, not an obligation of results.';

Present text

Amendment

(c) the second subparagraph is replaced by the following:

The design of the transition plan for climate change mitigation referred to in the first subparagraph shall contain:

'The design of the transition plan for climate change mitigation referred to in the first subparagraph shall contain:

(a) time-bound targetsrelated to climate change for 2030 and in five-year steps up to 2050 based on conclusive scientific evidence and, where appropriate, absolute emission reduction targets for greenhouse gas for scope 1, scope 2 and scope 3 greenhouse gas emissions for each significant category;

(a) objectives related to climate change for 2030 and in five-year steps up to climate neutrality in 2050 based on conclusive scientific evidence and, where appropriate, absolute emission reduction targets for greenhouse gas for scope 1, scope 2 and scope 3 greenhouse gas emissions for each significant category;

(b) a description of decarbonisation levers identified and key actions planned to reach the targets referred to in point (a),including, where appropriate, changes in the product and service portfolio of the company and the adoption of new technologies;

(b) a description ofkey decarbonisation levers identified andoutlining actions towards the objectives referred to in point (a);

(c) an explanation and quantificationof the investments and funding supporting the implementation of the transition plan for climate change mitigation; and

(c) a brief description of the investments and funding supporting the implementation of the transition plan for climate change mitigation.';

(d) a description of the role of the administrative, management and supervisory bodies with regard to the transition plan for climate change mitigation.

Present text

Amendment

(d) paragraph 3 is amended as follows:

3. Member States shall ensure that the transition plan for climate change mitigation referred to in paragraph 1 is updated every 12 months and contains a description of the progress the company has made towards achieving the targets referred to in paragraph 1, second subparagraph, point (a).

'3. Member State shall ensure that the transition plan for climate change mitigation referred to in paragraph 1 is updated every 12 months, including a brief progress descrition.';

Present text

Amendment

(10 a) in Article 25, paragraph 1 is replaced by the following:

'1. Member States shall ensure that the supervisory authorities have adequate powers and resources to carry out the tasks assigned to them under this Directive, including the power to require companies to provide information and carry out investigations related to compliance with the obligations set out in Articles 7 to 16. Member States shall require the supervisory authorities to supervise the adoption and designof the transition plan for climate change mitigation in accordance with the requirements provided for in Article 22(1).

'1. Member States shall ensure that the supervisory authorities have adequate powers and resources to carry out the tasks assigned to them under this Directive, including the power to require companies to provide information and carry out investigations related to compliance with the obligations set out in Articles 7 to 16. Member States shall require the supervisory authorities to supervise the adoption of the transition plan for climate change mitigation in accordance with the requirements provided for in Article 22(1).

In carrying out their supervisory function in respect of the adoption of the transition plan for climate change mitigation, the authorities shall take due account of, inter alia, the difficulties inherent in estimating future greenhouse gas emissions, the effectiveness and availability of certain climate change mitigation technologies, levers and actions over time and the overall complexity and evolving nature of climate transitioning. The authorities shall also, upon request, provide advice to companies regarding the adoption of transition plans for climate change mitigation.';

Text proposed by the Commission

Amendment

(11) in Article 27, paragraph 4 isreplaced by the following;

(11) Article 27 isamended as follows:

Text proposed by the Commission

Amendment

(a) in paragraph 2, point (d) is deleted;

Text proposed by the Commission

Amendment

(b) paragraph 4 is replaced by the following:

'4. The Commission, in collaboration with Member States, shall issue guidance to assist supervisory authorities in determining the level of penalties in accordance with this Article.Member States shall not set amaximum limit of pecuniary penalties in their national law transposing this Directive that would prevent supervisory authorities from imposing penalties in accordance with the principles and factors set out in paragraphs 1 and 2.';

4'. The Commission, in collaboration with Member States, shall issue guidance on the appropriate level of penalties, taking into account the turnover of companies,to assist supervisory authorities in determining the level of penalties in accordance with this Article. Member States shall ensure that themaximum limit of pecuniary penalties is set at 5% of the net worldwide turnover of the company or, in the case of companies referred to in Article 2(1), point (b) and Article 2(2), point (b), 5% of the net consolidated worldwide turnover calculated at the level of the ultimate parent company, in the financial year preceding that of the decision to impose the fine.';

Text proposed by the Commission

Amendment

(13) inArticle 36, paragraph 1 isdeleted.

(13) Article 36 is amended as follows:

Text proposed by the Commission

Amendment

(a) paragraph 1 is deleted

Present text

Amendment

(b) in paragraph 2, point (f) is replaced by the following:

(f) the effectiveness of the enforcement mechanisms put in place at national level, of the penalties and therules on civil liability;

'(f) the effectiveness of the enforcement mechanisms put in place at national level, of the penalties andwhether further rules on civil liabilityneed to be provided for in this Directive;';

Text proposed by the Commission

Amendment

Article4a

Digital solutions

1. The Commission shall establish a dedicated digital reporting portal serving as a one-stop-shop for companies. The portal shall provide free access to all templates, guidelines and information relating to all reporting requirements imposed on companies in Union law, including voluntary tools, tailored to a company's size, sector, products and services, and risk exposure. It shall also provide access to information on funding and tendering opportunities to help companies implement, comply with and benefit from their due diligence obligations.

For the purposes of the first subparagraph, the Commission shall ensure that the relevant data platforms providing information to companies and data users are interoperable and that data can be transmitted, exchanged and analysed in a technically seamless manner and complement the European Single Access Point.

2. The Commission shall submit a report to the European Parliament and the Council by [24 months after the entry into force of this Directive] on the need to provide for technological solutions for the purposes of this Directive, including the use of trustworthy artificial intelligence in accordance with Regulation (EU) 2024/1689.

1. Interest representatives falling within the scope of the Interinstitutional Agreement on a mandatory transparency register

EDEKA ZENTRALE Stiftung & Co. KG

Save the Children Europe

Finance Sweden

Morningstar, Inc

Shift

Confederation of Swedish Enterprise

Confederation of Finnish Industries EK

Business Europe

Ragn Sells AS

Brussels Office of the Swedish Trade Unions

EcoVadis

Responsible Business Alliance

FERMA

Teneo Brussels

Hagainitiativet

EUROPEAN TRADE UNION CONFEDERATION

European Coalition for Corporate Justice

Fair Trade Advocacy Office

EuropeanIssuers

European Banking Federation

DIGITALEUROPE

SME United

WWF

Frank Bold Society

Miele

COMPAGNIE NATIONALE DES COMMISSAIRES AUX COMPTES

FBF

Foundation for Family Businesses and Politics

Mouvement Impact France

EUROCHAMBRES - Association of European Chambers of Commerce and Industry

Finance Sweden

OECD

ExxonMobil

The Walt Disney Company Benelux BVBA

2. Representatives of public authorities of third countries, including their diplomatic missions and embassies

Text proposed by the Commission

Amendment

(2) In the context of the Commission's commitment to reduce reporting burdens and enhance competitiveness, it is necessary to amend Directives 2006/43/EC3, 2013/34/EU4, (EU) 2022/24645and (EU) 2024/1760 of the European Parliament and of the Council6, whilst maintaining the policy objectives of the European Green Deal7, and the Sustainable Finance Action Plan8.

(2) In the context of the Commission's commitment to reduce reporting burdens and enhance competitiveness, it is necessary to amend Directives 2006/43/EC3, 2013/34/EU4, (EU) 2022/24645and (EU) 2024/1760 of the European Parliament and of the Council6, whilst maintaining the policy objectives of the European Green Deal7, and the Sustainable Finance Action Plan8 in line with the profound transformation of the EU's economic and structural policies proposed by the Draghi and Letta Reports, and respecting its obligations on the protection of human rights.

__________________

__________________

3Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC (OJ L 157, 9.6.2006, p. 87, ELI: http://data.europa.eu/eli/dir/2006/43/oj).

3Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC (OJ L 157, 9.6.2006, p. 87, ELI: http://data.europa.eu/eli/dir/2006/43/oj).

4Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19, ELI: http://data.europa.eu/eli/dir/2013/34/oj).

4Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19, ELI: http://data.europa.eu/eli/dir/2013/34/oj).

5Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting (OJ L 322, 16.12.2022, p. 15, ELI: http://data.europa.eu/eli/dir/2022/2464/oj).

5Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting (OJ L 322, 16.12.2022, p. 15, ELI: http://data.europa.eu/eli/dir/2022/2464/oj).

6Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 (OJ L, 2024/1760, 5.7.2024, ELI: http://data.europa.eu/eli/dir/2024/1760/oj).

6Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 (OJ L, 2024/1760, 5.7.2024, ELI: http://data.europa.eu/eli/dir/2024/1760/oj).

7Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions of 11 December 2019, 'The European Green Deal', COM/2019/640 final.

7Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions of 11 December 2019, 'The European Green Deal', COM/2019/640 final.

8Communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions of 8 March 2018, 'Action Plan: Financing Sustainable Growth', COM/2018/097 final.

8Communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions of 8 March 2018, 'Action Plan: Financing Sustainable Growth', COM/2018/097 final.

Text proposed by the Commission

Amendment

(21) Article 5 of Directive (EU) 2024/1760 obliges Member States to ensure that large companies above a certain size conduct risk-based human rights and environmental due diligence. To reduce burdens oncompanies that have to comply with that obligation, the required due diligenceshould, as ageneral rule, be limited to the company'sown operations, those of its subsidiaries and those of its directbusiness partners ('tier 1'). Consequently, when it comes to business relationships,companies should, after having mappedtheir chains of activities, be required to carry out in-depth assessments as regardsdirect business partners only. Companies should, however, look beyond their direct business relationships where they have plausible information that suggests an adverse impact at the level of an indirect business partner. Plausible information means information of an objective character that allows the company to conclude that there is a reasonablelikelihood that the information is true. This may be the case where the company concerned has received a complaint or is in the possession of information, for example through credible media or NGO reports, reports of recent incidents, or through recurring problems at certain locations about likely or actual harmful activities at the level of an indirect business partner. Where the company has such information, it should carry out an in-depth assessment. Companies should also carry out in-depth assessments with respect toadverse impacts arising beyond their direct business partner where the structure of this business relationship lacks economic rationale and suggests that it was chosen to remove an otherwise direct supplier with harmful activities from the purview of the company. Where the in-depth assessment confirms the likelihood or existence of the adverse impact, it should then be deemed to be identified. In addition, companies should seek to ensure that their code of conduct - which is part of their due diligence policy and sets out the expectations as to how to protect human, including labour, rights and the environment in business operations - is followed throughout the chain of activities in accordance with contractual cascading and SME support.

(21) Article 5 of Directive (EU) 2024/1760 obliges Member States to ensure that large companies above a certain size conduct risk-based human rights and environmental due diligence. To ensure effectiveness, based on relevant, factual and reliable information reasonably available to the company, including geographical and sectoral risk factors,companies should perform an initialgeneral assessment of itsown operations, those of its subsidiaries and those of its business partners. Companies should carry out further assessments of the relevant business partner or the area intheir chains of activities where adverse impacts were identified to be most likely to occur and most severe. Companies shall be able to prioritise assessingdirect business partners, consistent with severity andlikelihood of theadverse impacts, following a risk-based approach.

Text proposed by the Commission

Amendment

(24) To reduce burdens on companies and makestakeholder engagement more proportionate, companies should onlyhave to engage with workers, their representatives including trade unions, and individuals and communities whose rights or interests are or could be directlyaffected by the products, services and operations of the company, its subsidiaries and its business partners, and that have a link to the specific stage of the due diligence process being carried out. That includes individuals or communities in the neighbourhood of plants operated by business partners where those individuals or communities are directlyaffected by pollution, or indigenous people whose right to lands or resources are directlyaffected by how a business partner acquires, develops or otherwise uses land, forests or waters. Moreover, stakeholder engagement should only be required for certain parts of the due diligence process, namely at the identification stage, for the development of (enhanced) action plans and when designing remediation measures.

(24) To reduce burdens on companies and to ensure effective and thoroughstakeholder engagement, companies should have to engage with workers, their representatives including trade unions, and individuals and communities whose rights or interests are or could be affected by the adverse impacts on human rights and the environment that stem fromthe products, services and operations of the company, its subsidiaries and its business partners, and that have a link to the specific stage of the due diligence process being carried out. That includes individuals or communities in the neighbourhood of plants operated by business partners where those individuals or communities are affected by the adverse impact ofpollution, or indigenous people whose right to lands or resources are affected by the adverse impact onhow a business partner acquires, develops or otherwise uses land, forests or waters.

Text proposed by the Commission

Amendment

(28) To limit possible litigation risks linked to the harmonised civil liability regime of Directive (EU) 2024/1760, the specific, Union-wide liability regime currently provided for in Article 29(1) of that Directive should be removed. At the same time,as a matter of both international and Union law, Member States should be required to ensure that victims of adverse impacts have effective access to justice and to guarantee their right to an effective remedy, as enshrined in Article 2(3) of the International Covenant on Civil and Political Rights, Article 8 of the Universal Declaration of Human Rights, Article 9(3) of the Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters (Aarhus Convention) and Article 47 of the EU Charter of Fundamental Rights. Member States should therefore ensure that, in case a company is held liable for a failure to comply with the due diligence requirements laid down in Directive (EU) 2024/1760, and that where such failure caused damage, victims are able to receive full compensation, which should be granted in accordance with the principles of effectiveness and equivalence, while balancing this through safeguards should prevent against overcompensation. In view of the different rules and traditions that exist at national level when it comes to allowing representative actions, the specific requirement in that regard inDirective (EU) 2024/1760 should be deleted. Such deletionis without prejudice to any provision of the applicable national law allowing a trade union, non-governmental human rights or environmental organisation, other non-governmental organisation or a national human rights institution to bring actions to enforce the rights of the alleged injured party, or to support such actions brought directly by such party. Furthermore, for the same reason, the requirement for Member States to ensure that the liability rules are of overriding mandatory application in cases where the law applicable to claims to that effect is not the national law of the Member State should be deleted. That deletion does not restrict the possibility for Member States to provide that the provisions of national law transposing Article 29 of Directive EU 2024/1760 are of overriding mandatory application in accordance with Article 16 of Regulation (EC) No 864/2007, in cases where the law applicable to claims to that effect is not the national law of a Member State.

(28) As a matter of both international and Union law, Member States should be required to ensure that victims of adverse impacts have effective access to justice and to guarantee their right to an effective remedy, as enshrined in Article 2(3) of the International Covenant on Civil and Political Rights, Article 8 of the Universal Declaration of Human Rights, Article 9(3) of the Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters (Aarhus Convention) and Article 47 of the EU Charter of Fundamental Rights. Member States should therefore ensure that, in case a company is held liable for a failure to comply with the due diligence requirements laid down in Directive (EU) 2024/1760, and that where such failure caused damage, victims are able to receive full compensation, which should be granted in accordance with the principles of effectiveness and equivalence, while balancing this through safeguards should prevent against overcompensation. ThisDirective is without prejudice to any provision of the applicable national law allowing a trade union, non-governmental human rights or environmental organisation, other non-governmental organisation or a national human rights institution to bring actions to enforce the rights of the alleged injured party, or to support such actions brought directly by such party.

Text proposed by the Commission

Amendment

(29a) In order to facilitate compliance by companies with reporting and due diligence obligations under Union law, and to enhance the accessibility and usability of sustainability-related information, the Commission should establish a dedicated digital reporting portal. That portal should serve as a one-stop shop, providing companies, free of charge, with tailored access to templates, reporting requirements, and information on funding and tendering opportunities. To ensure the effective functioning of the portal, the Commission should promote the interoperability of existing data platforms, enabling seamless transmission, exchange and analysis of data. Furthermore, and in view of the rapid technological developments, the Commission should assess the potential of technological solutions, including the use of trustworthy artificial intelligence in accordance with Regulation (EU) 2024/1689, to support the digitalisation of reporting and improve the quality and accessibility of sustainability-related data.

Text proposed by the Commission

Amendment

(n) 'stakeholders' means the company's employees, the employees of its subsidiaries and of its business partners, and their trade unions and workers' representatives, andindividuals or communities whose rights or interests are or could be directlyaffected by the products, services and operations of the company, its subsidiaries and its business partners and the legitimate representatives of those individuals or communities;;

(n) 'stakeholders' means the company's employees, the employees of its subsidiaries and of its business partners, and their trade unions and workers' representatives, individuals or communities whose rights or interests are or could be affected by the adverse impacts on human rights and the environment that stem fromthe products, services and operations of the company, its subsidiaries and its business partners, including, where relevant, civil society organisations whose purposes include the protection of human rights and the environmentand the legitimate representatives of those individuals or communities;;

Text proposed by the Commission

Amendment

(b) based on the results of the mappingas referred to in point (a), carry out and in-depthassessment of their own operations, those of their subsidiaries and, where related totheir chains of activities, those of their direct business partners, in the areaswhere adverse impacts were identified to be most likely to occur and most severe.;

(b) based on the results of the scopingas referred to in point (a), and where, on the basis of relevant, factual and reliable information, the company has grounds to believe that adverse impacts have arisen or may arise,carry out a furtherassessment of the relevant business partner or the area intheir chains of activities where adverse impacts were identified to be most likely to occur and most severe. Companies shall be able to prioritise assessing direct business partners, consistent with severity and likelihood of the adverse impacts, following a risk-based approach.;

Text proposed by the Commission

Amendment

(b) the following paragraph 2a is inserted:

deleted

'2a. Where a company has plausible information that suggests that adverse impacts at the level of the operations of an indirect business partner have arisen or may arise, it shall carry out an in-depth assessment. The company shall always carry out such an assessment where the indirect, rather than direct, nature of the relationship with the business partner is the result of an artificial arrangement that does not reflect economic reality but points to a circumvention of paragraph 2, point (b). Where the assessment confirms the likelihood or existence of the adverse impact, it is deemed to have been identified.

The first subparagraph is without prejudice to the company considering available information about indirect business partners and whether those business partners can follow the rules and principles set out in the company's code of conduct when selecting a direct business partner.

Notwithstanding the first subparagraph, irrespective of whether plausible information is available about indirect business partners, a company shall seek contractual assurances from a direct business partner that that business partner will ensure compliance with the company's code of conduct by establishing corresponding contractual assurances from its business partners. Article 10(2), points (b) and (e) shall apply accordingly.';

Text proposed by the Commission

Amendment

As regards actual adverse impacts as referred to in paragraph 1 that could not be prevented or adequately mitigatedby the measures set out in paragraphs 3, 5 and 6, the company shall, as a last resort:

As regards actual adverse impacts as referred to in paragraph 1 that could not be brought to an end or the extent of which could not be minimisedby the measures set out in paragraphs 3, 5 and 6, the company shall, temporarily, andas a last resort:

Text proposed by the Commission

Amendment

(b) where the law governing its relation with the business partner concerned so entitles it, adopt and implement an enhanced preventionaction plan for the specific adverse impact without undue delay, provided that there is a reasonable expectation that those efforts will succeed, and

(b) where the law governing its relation with the business partner concerned so entitles it, adopt and implement an enhanced correctiveaction plan for the specific adverse impact as soon as feasibly possible, provided that there is a reasonable expectation that those efforts will succeed, and

Text proposed by the Commission

Amendment

As long as there is a reasonable expectation that the enhanced preventionaction plan will succeed, the mere fact of continuing to engage with the business partner shall not trigger the company'sliability.

As long as there is a reasonable expectation that the enhanced correctiveaction plan will succeed, the mere fact of continuing to engage with the business partner shall not expose the company to penalties pursuant to the Article 27 or toliability under Article 29.

Text proposed by the Commission

Amendment

Prior to suspending a business relationship, the company shall assess whether the adverse impacts from doing so can be reasonably expected to be manifestly more severe than the adverse impact that could not be prevented or adequately mitigated. Should that be the case, the company shall not be required to suspend the business relationship and shall be in a position to reportto the competent supervisory authority about the duly justified reasons for such decision.

Prior to suspending a business relationship, the company shall assess, in consultation with relevant stakeholders, whether no available alternative to that business relationship, that provides a raw material, product or service essential to the company's production of goods or provision of services, exists and the suspension would cause substantial prejudice to the company orwhether the adverse impacts from doing so can be reasonably expected to be manifestly more severe than the adverse impact that could not be prevented, brought to an endor adequately mitigated. Should that be the case, provided that the adverse impacts do not amount to serious violations of international human rights law, the company shall not be required to suspend the business relationship and shall referto the competent supervisory authority to receive guidance on the course of action to take.

Text proposed by the Commission

Amendment

Member States shall provide for an option to suspend the business relationship in contracts governed by their laws in accordance with the first subparagraph, except for contracts where the parties are obliged by law to enter into them.

Member States shall provide for an option to temporarilysuspend, for a defined period of time,the business relationship in contracts governed by their laws in accordance with the first subparagraph, except for contracts where the parties are obliged by law to enter into them.

Text proposed by the Commission

Amendment

Where the company decides to suspend the business relationship, it shall take steps to prevent, mitigate or bring to an end the impacts of the suspension, shall provide reasonable notice to the business partner concerned and shall keep that decision under review.

Where the company decides to temporarilysuspend the business relationship, it shall take steps to prevent, mitigate or bring to an end the impacts of the suspension, shall provide reasonable notice to the business partner concerned and shall keep that decision under review to restore the relationship at the earliest possible opportunity. In case of suspension, it shall provide a clear end date, which is reasonable and does not jeopardise the viability of the business partner.

Text proposed by the Commission

Amendment

Where the company decides not to suspend the business relationship pursuant to this Article, it shall monitor the potentialadverse impact and periodically assess its decision and whether further appropriate measures are available.;

Where the company decides not to suspend the business relationship pursuant to this Article, it shall monitor the actualadverse impact and periodically assess its decision and whether further appropriate measures are available.;

Text proposed by the Commission

Amendment

(b) points (c) and (e) are deleted;

(b) point (c) is replaced by:

'(c) when deciding to suspend a business relationship pursuant to Article 10(6) and Article 11(7);';

Text proposed by the Commission

Amendment

Such assessments shall be based, where appropriate, on qualitative and quantitative indicators and be carried out without undue delay after a significant change occurs, but at least every 5 yearsand whenever there are reasonable grounds to believe that the measures are no longer adequate or effective or that new risks of the occurrence of those adverse impacts may arise.;

Such assessments shall be based, where appropriate, on qualitative and quantitative indicators and be carried out without undue delay after a significant change occurs, in consultation with relevant stakeholders,and whenever there are reasonable grounds to believe that the measures are no longer adequate or effective or that new risks of the occurrence of those adverse impacts may arise; where appropriate, the due diligence policy, the adverse impacts identified and the appropriate measures that derived shall be updated in accordance with the outcome of such assessments and on a voluntary basis with due consideration of relevant information from stakeholders.;

1. Interest representatives falling within the scope of the Interinstitutional Agreement on a mandatory transparency register

IBEC

Christian Aid Ireland

World Benchmarking Alliance

BusinessEurope

Fairtrade Advocacy

Banking & Payments Federation Ireland

European Coalition for Corporate Justice

Clean Clothes Campaign

European Central Bank

Office of the United Nations High Commissioner for Human Rights

Tony's Chocolonely

Nestlé

2. Representatives of public authorities of third countries, including their diplomatic missions and embassies

Title

Amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting and due diligence requirements

References

COM(2025)0081 - C10-0037/2025 - 2025/0045(COD)

Committee(s) responsible

Date announced in plenary

JURI

31.3.2025

Opinion by

Date announced in plenary

AFET

31.3.2025

Rapporteur for the opinion

Date appointed

Barry Andrews

10.4.2025

Discussed in committee

26.6.2025

Date adopted

15.7.2025

Result of final vote

+:

-:

0:

60

10

1

Members present for the final vote

Mika Aaltola, Lucia Annunziata, Petras Auštrevičius, Jordan Bardella, Wouter Beke, Robert Biedroń, Adam Bielan, Marc Botenga, Danilo Della Valle, Elio Di Rupo, Loucas Fourlas, Michael Gahler, Kinga Gál, Alberico Gambino, Giorgos Georgiou, Rasa Juknevičienė, Łukasz Kohut, Ondřej Kolář, Rihards Kols, Andrey Kovatchev, Nathalie Loiseau, Reinhold Lopatka, Antonio López-Istúriz White, Jaak Madison, David McAllister, Sven Mikser, Francisco José Millán Mon, Arkadiusz Mularczyk, Hannah Neumann, Leoluca Orlando, Urmas Paet, Kostas Papadakis, Tonino Picula, Thijs Reuten, Nacho Sánchez Amor, Mounir Satouri, Andreas Schieder, Alexander Sell, Villy Søvndal, Sebastiaan Stöteler, Marie-Agnes Strack-Zimmermann, Michał Szczerba, António Tânger Corrêa, Marta Temido, Cristian Terheş, Riho Terras, Pierre-Romain Thionnet, Sebastian Tynkkynen, Roberto Vannacci

Substitutes present for the final vote

Krzysztof Brejza, Jaroslav Bžoch, Sandra Gómez López, Mircea-Gheorghe Hava, Merja Kyllönen, Yannis Maniatis, Matjaž Nemec, Ana Miguel Pedro, Chloé Ridel, Marjan Šarec, Şerban Dimitrie Sturdza, Ingeborg Ter Laak, Matej Tonin, Petar Volgin, Michael von der Schulenburg, Thomas Waitz, Milan Zver

Members under Rule 216(7) present for the final vote

Barry Andrews, Javier Moreno Sánchez, Eugen Tomac, Dimitris Tsiodras, Catarina Vieira

60

+

ECR

Adam Bielan, Alberico Gambino, Rihards Kols, Jaak Madison, Arkadiusz Mularczyk, Şerban Dimitrie Sturdza, Cristian Terheş, Sebastian Tynkkynen

PPE

Mika Aaltola, Wouter Beke, Krzysztof Brejza, Loucas Fourlas, Michael Gahler, Mircea-Gheorghe Hava, Rasa Juknevičienė, Łukasz Kohut, Ondřej Kolář, Andrey Kovatchev, Reinhold Lopatka, Antonio López-Istúriz White, David McAllister, Francisco José Millán Mon, Ana Miguel Pedro, Michał Szczerba, Ingeborg Ter Laak, Riho Terras, Matej Tonin, Dimitris Tsiodras, Milan Zver

Renew

Barry Andrews, Petras Auštrevičius, Nathalie Loiseau, Urmas Paet, Marjan Šarec, Marie-Agnes Strack-Zimmermann, Eugen Tomac

S&D

Lucia Annunziata, Robert Biedroń, Elio Di Rupo, Sandra Gómez López, Yannis Maniatis, Sven Mikser, Javier Moreno Sánchez, Matjaž Nemec, Tonino Picula, Thijs Reuten, Chloé Ridel, Nacho Sánchez Amor, Andreas Schieder, Marta Temido

The Left

Marc Botenga, Danilo Della Valle, Giorgos Georgiou, Merja Kyllönen

Verts/ALE

Hannah Neumann, Leoluca Orlando, Mounir Satouri, Villy Søvndal, Catarina Vieira, Thomas Waitz

10

-

ESN

Alexander Sell, Petar Volgin

NI

Kostas Papadakis, Michael von der Schulenburg

PfE

Jordan Bardella, Kinga Gál, Sebastiaan Stöteler, António Tânger Corrêa, Pierre-Romain Thionnet, Roberto Vannacci

1

0

PfE

Jaroslav Bžoch

Text proposed by the Commission

Amendment

(-a) in paragraph 2, the introductory part is replaced by the following:

'2. As part of the obligation set out in paragraph 1, following a risk-based approach that takes into account relevant risk factors, companies shall take appropriate measures to:'

Text proposed by the Commission

Amendment

(-aa) in paragraph 2, point (a) is replaced by the following:

'(a) carry out a scoping, based on reasonably available information, to identify general areas across their own operations, those of their subsidiaries and, where related to their chains of activities, those of their business partners, where adverse impacts are most likely to occur and to be most severe;'

Text proposed by the Commission

Amendment

(b) based on the results of the mappingas referred to in point (a), carry out andin-depth assessment of their own operations, those of their subsidiaries and, where related totheir chains of activities, those of their direct business partners, in the areaswhere adverse impacts were identified to be most likely to occur and most severe.;

(b) based on the results of the scopingas referred to in point (a), and where, on the basis of relevant, factual and reliable information, the company has grounds to believe that adverse impacts have arisen or may arise,carry out anin-depth assessmentof the relevant business partners or the area intheir chains of activities where adverse impacts were identified to be most likely to occur and most severe. Companies shall be able to prioritise assessing direct business partners, in line with severity and likelihood of the adverse impacts.

Text proposed by the Commission

Amendment

(aa) in paragraph 2, the following subparagraph is added:

'Where the assessment confirms the likelihood or existence of the adverse impact, that impact shall be deemed to have been identified.'

Text proposed by the Commission

Amendment

(b) the following paragraph 2a is inserted:

deleted

'2a. Where a company has plausible information that suggests that adverse impacts at the level of the operations of an indirect business partner have arisen or may arise, it shall carry out an in-depth assessment. The company shall always carry out such an assessment where the indirect, rather than direct, nature of the relationship with the business partner is the result of an artificial arrangement that does not reflect economic reality but points to a circumvention of paragraph 2, point (b). Where the assessment confirms the likelihood or existence of the adverse impact, it is deemed to have been identified.

The first subparagraph is without prejudice to the company considering available information about indirect business partners and whether those business partners can follow the rules and principles set out in the company's code of conduct when selecting a direct business partner.

Notwithstanding the first subparagraph, irrespective of whether plausible information is available about indirect business partners, a company shall seek contractual assurances from a direct business partner that that business partner will ensure compliance with the company's code of conduct by establishing corresponding contractual assurances from its business partners. Article 10(2), points (b) and (e) shall apply accordingly.';

Text proposed by the Commission

Amendment

(ba) the following paragraph is inserted:

'2aa. Relevant, factual and reliable information shall include:

(a) submissions of information made pursuant to Article 14;

(b) information made available by any authority relevant for the implementation of this Directive, such as Member States' due diligence, labour, or health authorities;

(c) any issues arising from meaningful consultations with relevant stakeholders, such as business representatives, civil society organisations and trade unions, or pursuant to Article 13;

(d) reports, studies and impact assessments by relevant entities, including industry and multi-stakeholder initiatives.'

Text proposed by the Commission

Amendment

4. Where information necessaryfor the in-depth assessment provided forin paragraph 2, point (b), and in paragraph 2acan be obtained from different business partners, the company shall prioritise requesting such information, where reasonable,directly from the business partner or partners where the adverse impacts are most likely to occur.;

4. For the purposes ofthe in-depth assessment in accordance withparagraph 2, point (b), where existing and external data sources are not sufficient and additional necessary informationcan be obtained from different business partners, the company shall prioritise requesting such information directly from the business partner or partners where the adverse impacts are most likely to occur.;

Text proposed by the Commission

Amendment

(c) use or increase its leverage through the suspension of the business relationship with respect to the activities concerned.

(c) use or increase its leverage, where possible,through the temporarysuspension of the business relationship with respect to the activities concerned.

Text proposed by the Commission

Amendment

Prior to suspending a business relationship, the company shall assess whether the adverse impacts from doing so can be reasonably expected to be manifestly more severe than the adverse impact that could not be prevented or adequately mitigated. Should that be the case, the company shall not be required to suspend the business relationship and shall be in a position to reportto the competent supervisory authority about the duly justified reasons for such decision.

Prior to temporarilysuspending a business relationship, the company shall assess in consultation with relevant stakeholders, whether no available alternative to that business relationship, that provides a raw material, product or service essential to the company's production of goods or provision of services, exists and the suspension would cause substantial prejudice to the company orwhether the adverse impacts from doing so can be reasonably expected to be manifestly more severe than the adverse impact that could not be prevented or adequately mitigated. Should that be the case, the company shall not be required to suspend the business relationship and shall referto the competent supervisory authority to receive guidance on the course of action to take.

Text proposed by the Commission

Amendment

Member States shall provide for an option to suspend the business relationship in contracts governed by their laws in accordance with the first subparagraph, except for contracts where the parties are obliged by law to enter into them.

Member States shall provide for an option to suspend or terminatethe business relationship in contracts governed by their laws in accordance with the first subparagraph, except for contracts where the parties are obliged by law to enter into them.

Text proposed by the Commission

Amendment

As regards actual adverse impacts as referred to in paragraph 1 that could not be prevented or adequately mitigatedby the measures set out in paragraphs 3, 5 and 6, the company shall, as a last resort:

As regards actual adverse impacts as referred to in paragraph 1 that could not be brought to an end or the extent of which could not be minimisedby the measures set out in paragraphs 3, 5 and 6, the company shall, as a last resort:

Text proposed by the Commission

Amendment

(b) where the law governing its relation with the business partner concerned so entitles it, adopt and implement an enhanced preventionaction plan for the specific adverse impact without undue delay, provided that there is a reasonable expectation that those efforts will succeed, and

(b) where the law governing its relation with the business partner concerned so entitles it, adopt and implement an enhanced correctiveaction plan for the specific adverse impact without undue delay, provided that there is a reasonable expectation that those efforts will succeed, and

Text proposed by the Commission

Amendment

(c) use or increase its leverage through the suspension of the business relationship with respect to the activities concerned.

(c) use or increase its leverage, where possible,through the temporarysuspension of the business relationship with respect to the activities concerned.

Text proposed by the Commission

Amendment

As long as there is a reasonable expectation that the enhanced preventionaction plan will succeed, the mere fact of continuing to engage with the business partner shall not trigger the company's liability.

As long as there is a reasonable expectation that the enhanced correctiveaction plan will succeed, the mere fact of continuing to engage with the business partner shall not trigger the company's liability.

Text proposed by the Commission

Amendment

Prior to suspending a business relationship, the company shall assess whether the adverse impacts from doing so can be reasonably expected to be manifestly more severe than the adverse impact that could not be prevented or adequately mitigated. Should that be the case, the company shall not be required to suspend the business relationship and shall be in a position to reportto the competent supervisory authority about the duly justified reasons for such decision.

Prior to temporarilysuspending a business relationship, the company shall assess, in consultation with relevant stakeholders, whether no available alternative to that business relationship, that provides a raw material, product or service essential to the company's production of goods or provision of services, exists and the suspension would cause substantial prejudice to the company, orwhether the adverse impacts from doing so can be reasonably expected to be manifestly more severe than the adverse impact that could not be brought to an end. Should that be the case, provided that the adverse impacts do not amount to serious violations of international human rights law, the company shall not be required to suspend the business relationship and shall referto the competent supervisory authority to receive guidance on the course of action to take.

Text proposed by the Commission

Amendment

Member States shall provide for an option to suspend the business relationship in contracts governed by their laws in accordance with the first subparagraph, except for contracts where the parties are obliged by law to enter into them.

Member States shall provide for an option to suspend or terminatethe business relationship in contracts governed by their laws in accordance with the first subparagraph, except for contracts where the parties are obliged by law to enter into them.

Text proposed by the Commission

Amendment

Where the company decides not to suspend the business relationship pursuant to this Article, it shall monitor the potentialadverse impact and periodically assess its decision and whether further appropriate measures are available.;

Where the company decides not to suspend the business relationship pursuant to this Article, it shall monitor the actualadverse impact and periodically assess its decision and whether further appropriate measures are available.;

1. Interest representatives falling within the scope of the Interinstitutional Agreement on a mandatory transparency register

Suomen Tekstiili ja Muoti ry

Hitachi Energy

Global Witness

Finnwatch ry

Burson X

ACEA Auto

The Walt Disney Company

Koch

Kaupan liitto

Nokia

Teneo

Elinkeinoelämän keskusliitto

Teknologiateollisuus ry

Atlantic Council

Japan Business Council in Europe

EESC

2. Representatives of public authorities of third countries, including their diplomatic missions and embassies

Title

Amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting and due diligence requirements

References

COM(2025)0081 - C10-0037/2025 - 2025/0045(COD)

Committee(s) responsible

Date announced in plenary

JURI

31.3.2025

Opinion by

Date announced in plenary

INTA

31.3.2025

Rapporteur for the opinion

Date appointed

Mika Aaltola

29.4.2025

Discussed in committee

14.5.2025

Date adopted

15.7.2025

Result of final vote

+:

-:

0:

36

4

1

Members present for the final vote

Manon Aubry, Christophe Bay, Brando Benifei, Lynn Boylan, Anna Bryłka, Udo Bullmann, Benoit Cassart, Andi Cristea, Bart Groothuis, Enikő Győri, Svenja Hahn, Karin Karlsbro, Rudi Kennes, Rihards Kols, Sebastian Kruis, Bernd Lange, Ilia Lazarov, Miriam Lexmann, Jaak Madison, Gabriel Mato, Javier Moreno Sánchez, Ştefan Muşoiu, Daniele Polato, Majdouline Sbai, Lukas Sieper, Francesco Torselli, Inese Vaidere, Marie-Pierre Vedrenne, Catarina Vieira, Jörgen Warborn, Iuliu Winkler, Bogdan Andrzej Zdrojewski, Juan Ignacio Zoido Álvarez

Substitutes present for the final vote

Mika Aaltola, Francisco Assis, Nina Carberry, Dariusz Joński, Cristina Maestre, Branislav Ondruš, Pierre Pimpie

Members under Rule 216(7) present for the final vote

Hans Neuhoff

36

+

ECR

Rihards Kols, Jaak Madison, Daniele Polato, Francesco Torselli

NI

Lukas Sieper

PPE

Mika Aaltola, Nina Carberry, Dariusz Joński, Ilia Lazarov, Miriam Lexmann, Gabriel Mato, Inese Vaidere, Jörgen Warborn, Iuliu Winkler, Bogdan Andrzej Zdrojewski, Juan Ignacio Zoido Álvarez

PfE

Christophe Bay, Anna Bryłka, Enikő Győri, Sebastian Kruis, Pierre Pimpie

Renew

Benoit Cassart, Bart Groothuis, Svenja Hahn, Karin Karlsbro, Marie-Pierre Vedrenne

S&D

Francisco Assis, Brando Benifei, Udo Bullmann, Andi Cristea, Bernd Lange, Cristina Maestre, Javier Moreno Sánchez, Ştefan Muşoiu

Verts/ALE

Majdouline Sbai, Catarina Vieira

4

-

ESN

Hans Neuhoff

The Left

Manon Aubry, Lynn Boylan, Rudi Kennes

1

0

NI

Branislav Ondruš

Text proposed by the Commission

Amendment

(5) Article 19a(1) of Directive 2013/34/EU requires large undertakings and small and medium-sized undertakings with securities admitted to trading on an EU regulated market, excluding micro-undertakings, to prepare and publish a sustainability statement at individual level. To reduce the reporting burden on undertakings, the obligation to prepare and publish a sustainability statement at individual level should be reduced to large undertakings with an average of more than 1000employees during the financial year. Considering that for an undertaking to be large it has to exceed two out of the three criteria in Article 3(4) of Directive 2013/34/EU, this means that to be subject toto the reporting requirements an undertakings must have an average of more than 1000 employees during the financial year and either a net turnover above EUR 50 million or a balance sheet total above EUR 25 million.

(5) Article 19a(1) of Directive 2013/34/EU requires large undertakings and small and medium-sized undertakings with securities admitted to trading on an EU regulated market, excluding micro-undertakings, to prepare and publish a sustainability statement at individual level. To reduce the reporting burden on undertakings, the obligation to prepare and publish a sustainability statement at individual level should be reduced to large undertakings with an average of more than 5000employees and a net worldwide turnover of more than EUR 450 000 000during the financial year.

Text proposed by the Commission

Amendment

(6) A balance needs to be found between the objectives of data generation and reduction of administrative burden. Sustainability reporting, including the information referred to in Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council9 , of large undertakings with an average of more than 1000 employees during the financial year is indispensable to understand the transition to a climate-neutral economy. In the light of the balance to be found between the objectives of data generation and reduction of administrative burden, large undertakings within the new scope for sustainability reporting that have a net turnover not exceeding EUR 450 000 000 during the financial year should be able to disclose information referred to in Article 8 of Regulation (EU) 2020/852 in a more flexible way. The Commission should be empowered to set out rules supplementing the reporting regime for those undertakings. It should in particular be clarified that the Commission is empowered to specify the reporting regime for activities that are only partially taxonomy aligned.

deleted

__________________

9 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13, ELI: http://data.europa.eu/eli/reg/2020/852/oj).

Text proposed by the Commission

Amendment

(7) Article 1(3) of Directive 2013/34/EU specifies that credit institutions and insurance undertakings that are large undertakings or small and medium-size undertakings - excluding micro-undertakings - with securities admitted to trading on an EU regulated market are subject to the sustainability reporting requirements set out in that Directive, regardless of their legal form. Considering that the scope of individual sustainability reporting should be reduced to large undertakings with an average of more than 1000employees during the financial year, that reduction in scope should also apply to credit institutions and insurance undertakings.

(7) Article 1(3) of Directive 2013/34/EU specifies that credit institutions and insurance undertakings that are large undertakings or small and medium-size undertakings - excluding micro-undertakings - with securities admitted to trading on an EU regulated market are subject to the sustainability reporting requirements set out in that Directive, regardless of their legal form. Considering that the scope of individual sustainability reporting should be reduced to large undertakings with an average of more than 5000employees and a net worldwide turnover of more than EUR 450 000 000during the financial year, that reduction in scope should also apply to credit institutions and insurance undertakings.

Text proposed by the Commission

Amendment

(7a) For the purpose of consistency with this Directive, financial sector legislation should not specify any requirements for the financial sector that would require financial undertakings to obtain any information from undertakings which are not obliged to publish non-financial information pursuant to Article 19a or 29a of Directive 2013/34/EU. Sector-specific financial services legislation, including delegated acts, guidelines by the ESAs and supervisory expectations, should be amended to reflect the content of this Directive.

Text proposed by the Commission

Amendment

(9) Article 19a(3) of Directive 2013/34/EU requires undertakings to report information about the undertaking's own operations and about its value chain. It is necessary to reduce the reporting burden for undertakings in the value chain that are not required to report on their sustainability. The reporting undertaking, for the purposes of reporting sustainability information at individual or at consolidated level, as required by Directive 2013/34/EU, and without prejudice to Union requirements to conduct a due diligence process, should therefore not seek to obtain from undertakings established in or outside of the Union in its value chain that have up to 1000employees on average during the financial year any information that goes beyond the information specified in the standards for voluntary use by undertakings that are not required to report on their sustainability. The reporting undertaking should, however, be allowed to collect from such undertakings in its value chain any additional sustainability information that is commonly shared between undertakings in the sector concerned. Undertakings reporting on their value chain in accordance with those limitations should be deemed to comply with the obligation to report on their sustainability. Assurance providers should prepare their assurance opinion respecting the obligation on undertakings not to seek to obtain from undertakings in their value chain that have up to 1000employees on average during the financial year any information that goes beyond the information specified in the standards for voluntary use by undertakings that are not required to report on their sustainability. For that purpose, the Commission should be empowered to adopt a delegated act to provide for sustainability reporting standards for voluntary use by undertakings that are not required to report on their sustainability. Those standards should be proportionate to, and relevant for, the capacities and the characteristics of those undertakings and to the scale and complexity of their activities. Those standards should also specify, where possible, the structure to be used to present that information.

(9) Article 19a(3) of Directive 2013/34/EU requires undertakings to report information about the undertaking's own operations and about its value chain. It is necessary to reduce the reporting burden for undertakings in the value chain that are not required to report on their sustainability. The reporting undertaking, for the purposes of reporting sustainability information at individual or at consolidated level, as required by Directive 2013/34/EU, and without prejudice to Union requirements to conduct a due diligence process, should therefore not seek to obtain from undertakings established in or outside of the Union in its value chain that have up to 5000employees on average and a net worldwide turnover of more than EUR 450 000 000during the financial year any information that goes beyond the information specified in the standards for voluntary use by undertakings that are not required to report on their sustainability. Undertakings reporting on their value chain in accordance with those limitations should be deemed to comply with the obligation to report on their sustainability. Assurance providers should prepare their assurance opinion respecting the obligation on undertakings not to seek to obtain from undertakings in their value chain that have up to 5000employees on average and a net worldwide turnover of more than EUR 450 000 000during the financial year any information that goes beyond the information specified in the standards for voluntary use by undertakings that are not required to report on their sustainability. For that purpose, the Commission should be empowered to adopt a delegated act to provide for sustainability reporting standards for voluntary use by undertakings that are not required to report on their sustainability. Those standards should be proportionate to, and relevant for, the capacities and the characteristics of those undertakings and to the scale and complexity of their activities. Those standards should also specify, where possible, the structure to be used to present that information.

Text proposed by the Commission

Amendment

(12) Article 29a(1) of Directive 2013/34/EU requires parent undertakings of large groups to prepare and publish a sustainability statement at consolidated level. To reduce the reporting burden on those parent undertakings, the scope of that obligation should be reduced to parent undertakings of large groups with an average of more than 1000employees, on a consolidated basis, during the financial year.

(12) Article 29a(1) of Directive 2013/34/EU requires parent undertakings of large groups to prepare and publish a sustainability statement at consolidated level. To reduce the reporting burden on those parent undertakings, the scope of that obligation should be reduced to parent undertakings of large groups with an average of more than 5000employees and a net worldwide turnover of more than EUR 450 000 000, on a consolidated basis, during the financial year.

Text proposed by the Commission

Amendment

(14) Article 29b(4) of Directive 2013/34/EU requires sustainability reporting standards to not specify disclosures requiring undertakings to obtain from small and medium-sized undertakings in their value chain any information that goes beyond the information to be disclosed pursuant to the sustainability reporting standards for small and medium-sized undertakings with securities admitted to trading on an EU regulated market. Considering that small and medium-sized undertakings with securities admitted to trading on an EU regulated market should be excluded from sustainability reporting, and in order to reduce the reporting burden for undertakings in the value chain that are not required to report on their sustainability, the sustainability reporting standards should not specify disclosures requiring undertakings to obtain from undertakings in their value chain that have up to 1000 employees on average during the financial yearany information that goes beyond theinformation to bedisclosed pursuant to the sustainability reporting standards for voluntary use by undertakings that are not required to report on their sustainability.

(14) Article 29b(4) of Directive 2013/34/EU requires sustainability reporting standards to not specify disclosures requiring undertakings to obtain from small and medium-sized undertakings in their value chain any information that goes beyond the information to be disclosed pursuant to the sustainability reporting standards for small and medium-sized undertakings with securities admitted to trading on an EU regulated market. Considering that small and medium-sized undertakings with securities admitted to trading on an EU regulated market should be excluded from sustainability reporting, and in order to reduce the reporting burden for undertakings in the value chain that are not required to report on their sustainability, the sustainability reporting standards should not specify disclosures requiring undertakings to obtain from undertakings in their value chain any information that exceeds the most recentinformation disclosed pursuant to Article 19a or 29a of Directive 2013/34/EU orthe sustainability reporting standards for voluntary use by undertakings that are not required to report on their sustainability.

Text proposed by the Commission

Amendment

(17) Pursuant to Article 40a(1), fourth and fifth subparagraph of Directive 2013/34/EU, a subsidiary in the Union of a third-county undertaking that generates a net turnover of more than EUR 150 million in the Union, or, in the absence of such subsidiary, a branch in the Union that generates a net turnover of more than EUR 40 million, is to publish and make accessible sustainability information at the group level of the third-country parent undertaking. To reach closer alignment with the criteria used to define which undertakings are in the scope of Directive (EU) 2024/1760, the net turnover threshold for the third-country undertaking should be raised from EUR 150 000 000 to EUR 450 000 000. For reasons of consistency and burden reduction, the size for a subsidiary undertaking and a branch to be in scope of Article 40a should be adjusted. The size of the subsidiary undertaking should be that of a large undertaking, whilst the net turnover criteria for the branch should be raised from EUR 40 000 000 to EUR 50 000 000, to align with the net turnover threshold for large undertakings.

(17) Pursuant to Article 40a(1), fourth and fifth subparagraph of Directive 2013/34/EU, a subsidiary in the Union of a third-county undertaking that generates a net turnover of more than EUR 150 million in the Union, or, in the absence of such subsidiary, a branch in the Union that generates a net turnover of more than EUR 40 million, is to publish and make accessible sustainability information at the group level of the ultimatethird-country parent undertaking. To reach closer alignment with the criteria used to define which undertakings are in the scope of Directive (EU) 2024/1760, the net turnover threshold for the third-country undertaking should be raised from EUR 150 000 000 to EUR 450 000 000. For reasons of consistency and burden reduction, the size for a subsidiary undertaking and a branch to be in scope of Article 40a should be adjusted. The size of the subsidiary undertaking should be that of a large undertaking, whilst the net turnover criteria for the branch should be raised from EUR 40 000 000 to EUR 50 000 000, to align with the net turnover threshold for large undertakings.

Text proposed by the Commission

Amendment

(18) Article 5(2), first subparagraph, of Directive (EU) 2022/2464 specifies the dates by which the Member States are to apply the sustainability reporting requirements set out in Directive 2013/34/EU, with different dates depending on the size of the undertaking concerned. Considering that the scope of the individual sustainability reporting requirements should be reduced to include only large undertakings with more than 1000employees on average during the financial year, and that the scope of the consolidated sustainability reporting requirements should be reduced accordingly, the criteria for determining the dates of application should be adjusted, and the reference to small and medium-sized undertakings with securities admitted to trading on an EU regulated market should be removed.