### (15) the union should only impose countermeasures when other means such as negotiations , mediation or adjudication do not lead to the prompt and effective cessation of the economic coercion and to reparation of the injury it has caused to the union or its member states , and where action is necessary to protect the interests and rights of the union and its member states and it is in the union’s interest. it is appropriate that the regulation sets out the applicable rules and procedures for the imposition and application of union response measures and permits expeditious action where necessary to preserve the effectiveness of any union response measures. ### (15) the union should only impose anti-coercion measures after exhausting other remedies such as negotiations , mediation or adjudication at the wto dispute settlement mechanism , these must be a precondition for the triggering of this instrument. it is appropriate that the regulation sets out the applicable rules and procedures for the imposition and application of union response measures and permits expeditious action where necessary to preserve the effectiveness of any union response measures.


### (18) in pursuing the objective of obtaining the cessation of the measure of economic coercion , union response measures consisting of restrictions on foreign direct investment or on trade in services should only apply with regard to services supplied , or direct investments made , within the union by one or more legal persons established in the union which are owned or controlled by persons of the third country concerned where necessary to ensure the effectiveness of union response measures and in particular to prevent their avoidance. the decision to impose any such restrictions will be duly justified in implementing acts adopted pursuant to this regulation in the light of the criteria specified in this regulation. ### (18) in pursuing the objective of obtaining the cessation of the measure of economic coercion , union response measures consisting of restrictions on foreign direct investment or on trade in services should only apply with regard to services supplied , or direct investments made , within the union by one or more legal persons established in the union which are owned or controlled by persons of the third country concerned where necessary to ensure the effectiveness of union response measures and in particular to prevent their avoidance. the decision to impose any such restrictions will be duly justified in delegated acts adopted pursuant to this regulation in the light of the criteria specified in this regulation.


### (25) the commission should adopt immediately applicable implementing acts of limited duration where , in duly justified cases relating to the adoption , amendment , suspension or termination of union response measures , imperative grounds of urgency so require. ### (25) the commission should propose delegated acts where , in duly justified cases relating to the adoption , amendment , suspension or termination of union response measures , imperative grounds so require.


### 1. this regulation lays down rules and procedures in order to ensure the effective protection of the interests of the union and its member states where a third country seeks , through measures affecting trade or investment , to coerce the union or a member state into adopting or refraining from adopting a particular act. this regulation provides a framework for the union to respond in such situations with the objective to deter , or have the third country desist from such actions , whilst permitting the union , in the last resort , to counteract such actions. ### 1. this regulation lays down rules and procedures in order to ensure the effective protection of the interests of the union and its member states where a third country seeks , through measures affecting trade or investment , including extra-territorial sanctions , to coerce the union or a member state into adopting or refraining from adopting a particular act. this regulation provides a framework for the union to respond in such situations with the objective to deter , or have the third country desist from such actions , whilst permitting the union , in the last resort , to counteract such actions.


### — interferes in the legitimate sovereign choices of the union or a member state by seeking to prevent or obtain the cessation , modification or adoption of a particular act by the union or a member state ### — interferes in the legitimate sovereign choices of the union or a member state by seeking to prevent or obtain the cessation , modification or adoption of a particular act by the union or a member state , including extra-territorial sanctions


### 1. the commission shall adopt an implementing act determining that it shall take a union response measure where: ### 1. the commission shall propose delegated act determining that it shall take a union response measure where:


### in the implementing act , the commission shall also determine the appropriate union response from among the measures provided for in annex i. such measures may also apply with regard to natural or legal persons designated in accordance with article 8. the commission may also adopt measures which it can take pursuant to other legal instruments. ### in the delegated act , the commission shall also propose the appropriate union response from among the measures provided for in annex i. such measures may also apply with regard to natural or legal persons designated in accordance with article 8. the commission may also propose measures which it can take pursuant to other legal instruments.


### the implementing act shall be adopted in accordance with the examination procedure referred to in article 15(2). ### the delegated act shall be adopted in accordance with the examination procedure referred to in article 15(2).


### 2. the union response measures shall apply from a specified date after the adoption of the implementing act referred to in paragraph 1. the commission shall set this date of application , taking into account the circumstances , to allow for the notification of the third country concerned pursuant to paragraph 3 and for it to cease the economic coercion. ### 2. the union response measures shall apply from a specified date after the adoption of the delegated act referred to in paragraph 1. the commission shall set this date of application , taking into account the circumstances , to allow for the notification of the third country concerned pursuant to paragraph 3 and for it to cease the economic coercion.


### 3. the commission shall , upon adoption of the implementing act , notify the third country concerned of the union response measures adopted pursuant to paragraph 1. in the notification , the commission shall , on behalf of the union , call on the third country concerned to promptly cease the economic coercion , offer to negotiate a solution , and inform the third country concerned that the union response measure will apply , unless the economic coercion ceases. ### 3. the commission shall , upon adoption of the delegated act , notify the third country concerned of the union response measures adopted pursuant to paragraph 1. in the notification , the commission shall , on behalf of the union , call on the third country concerned to promptly cease the economic coercion , offer to negotiate a solution , and inform the third country concerned that the union response measure will apply , unless the economic coercion ceases.


### 4. the implementing act referred to in paragraph 1 shall state that the application of the union response measures shall be deferred for a period specified in that implementing act , where the commission has credible information that the third country has ceased the economic coercion before the start of application of the adopted union response measures. in that event , the commission shall publish a notice in the official journal of the european union indicating that there is such information and the date from which the deferral shall apply. if the third country ceases the economic coercion before the union response measures start to apply , the commission shall terminate the union response measures in accordance with article 10. ### 4. the delegated act referred to in paragraph 1 shall state that the application of the union response measures shall be deferred for a period specified in that delegated act , where the commission has credible information that the third country has ceased the economic coercion before the start of application of the adopted union response measures. in that event , the commission shall publish a notice in the official journal of the european union indicating that there is such information and the date from which the deferral shall apply. if the third country ceases the economic coercion before the union response measures start to apply , the commission shall terminate the union response measures in accordance with article 10.


### 6. on duly justified imperative grounds of urgency to avoid irreparable damage to the union or its member states by the measures of economic coercion the commission shall adopt immediately applicable implementing acts imposing union response measures , in accordance with the procedure referred to in article 15(3). the requirements set out in paragraphs 2 to 5 shall apply. those acts shall remain in force for a period not exceeding three months. ### 6. on duly justified imperative grounds of urgency to avoid irreparable damage to the union or its member states by the measures of economic coercion the commission shall adopt applicable delegated acts imposing union response measures , in accordance with the procedure referred to in article 15(3). the requirements set out in paragraphs 2 to 5 shall apply. those acts shall remain in force for a period not exceeding three months.


### 1. the commission may provide , in the implementing act referred to in article 7(1) , or in a separate implementing act , that: ### 1. the commission may propose delegated act , that:


### those measures shall apply as of the same date of application as the union response measures adopted pursuant to article 7 , or as of a later date specified in the implementing act pursuant to this paragraph. ### those measures shall apply as of the same date of application as the union response measures adopted pursuant to article 7 , or as of a later date specified in the delegated act pursuant to this paragraph.


### those implementing acts shall be adopted in accordance with the examination procedure referred to in article 15(2). ### those delegated acts shall be adopted in accordance with the examination procedure referred to in article 15(2).


### any decision to apply restrictions with regard to services supplied , or direct investments made , within the union by one or more legal persons established in the union shall be duly justified in the implementing act referred to in paragraph 1 of article 7 in light of the above criteria. ### any decision to apply restrictions with regard to services supplied , or direct investments made , within the union by one or more legal persons established in the union shall be duly justified in the delegated act referred to in paragraph 1 of article 7 in light of the above criteria.


### 2. where the third country concerned suspends the economic coercion , or where it is necessary in the union’s interest , the commission may suspend the application of the respective union response measure for the duration of the third country’s suspension , or as long as necessary in light of the union’s interest. the commission shall suspend the union response measures if the third country concerned has offered , and the union has concluded , an agreement to submit the matter to binding international third-party adjudication and the third country is also suspending its measures of economic coercion. the commission shall , by means of an implementing act , decide to suspend the union response measure. these implementing acts shall be adopted in accordance with the examination procedure referred to in article 15(2). ### 2. where the third country concerned suspends the economic coercion , or where it is necessary in the union’s interest , the commission may propose to suspend the application of the respective union response measure for the duration of the third country’s suspension , or as long as necessary in light of the union’s interest. the commission shall suspend the union response measures if the third country concerned has offered , and the union has concluded , an agreement to submit the matter to binding international third-party adjudication and the third country is also suspending its measures of economic coercion. the commission shall propose to suspend the union response measure. these delegated acts shall be adopted in accordance with the examination procedure referred to in article 15(2).


### 3. where it is necessary to make adjustments to union response measures taking into account the conditions and criteria laid down in articles 2 and 9(2) , or further developments , including the third country’s reaction , the commission may , as appropriate , amend union response measures adopted in accordance with article 7 , by means of an implementing act , in accordance with the examination procedure referred to in article 15(2). ### 3. where it is necessary to make adjustments to union response measures taking into account the conditions and criteria laid down in articles 2 and 9(2) , or further developments , including the third country’s reaction , the commission may propose , as appropriate , to amend union response measures adopted in accordance with article 7 , by means of an delegated act , in accordance with the examination procedure referred to in article 15(2).


### the termination of union response measures adopted in accordance with article 7 shall be decided , by means of an implementing act , in accordance with the examination procedure referred to in article 15(2). ### the termination of union response measures adopted in accordance with article 7 shall be decided , by means of a delegated act , in accordance with the examination procedure referred to in article 15(2).


### 5. on duly justified imperative grounds of urgency , the commission shall adopt immediately applicable implementing acts suspending , amending or terminating union response measures adopted in accordance with article 7. those implementing acts shall be adopted in accordance with the procedure referred to in article 15(3) and they shall remain in force for a period not exceeding two months. ### 5. on duly justified imperative grounds of urgency , the commission shall propose to adopt applicable delegated acts suspending , amending or terminating union response measures adopted in accordance with article 7. those delegated acts shall be adopted in accordance with the procedure referred to in article 15(3) and they shall remain in force for a period not exceeding two months.


### 5. the commission shall take utmost account of the information gathered during the information gathering exercise. an analysis of the envisaged measures shall accompany the draft implementing act when submitted to the committee in the context of the examination procedure referred to in article 15(2). ### 5. the commission shall take utmost account of the information gathered during the information gathering exercise. an analysis of the envisaged measures shall accompany the draft delegated act when submitted to the committee in the context of the examination procedure referred to in article 15(2).


### 6. prior to the adoption of an implementing act in accordance with article 7(6) or article 10(5) , the commission shall seek information and views from relevant stakeholders in a targeted manner , unless the imperative grounds of urgency are such that information seeking and consultations are not possible or not needed for objective reasons , for instance to ensure compliance with international obligations of the union. ### 6. prior to the adoption of an delegated act in accordance with article 7(6) or article 10(5) , the commission shall seek information and views from relevant stakeholders in a targeted manner , unless the imperative grounds of urgency are such that information seeking and consultations are not possible or not needed for objective reasons , for instance to ensure compliance with international obligations of the union.


### 2. no later than three years after the adoption of the first implementing act under this regulation or six years after the entry into force of this regulation , whichever is earlier , the commission shall review this regulation and its implementation and shall report to the european parliament and the council. ### 2. no later than three years after the adoption of the first delegated act under this regulation or six years after the entry into force of this regulation , whichever is earlier , the commission shall review this regulation and its implementation and shall report to the european parliament and the council.


### (3) in its communication on a strong social europe for just transition75 , the commission committed to upgrading europe’s social market economy to achieve a just transition to sustainability. this directive will also contribute to the european pillar of social rights , which promotes rights ensuring fair working conditions. it forms part of the eu policies and strategies relating to the promotion of decent work worldwide , including in global value chains , as referred to in the commission communication on decent work worldwide76. ### (3) in its communication on a strong social europe for just transition75 , the commission committed to achieving a just transition to sustainability and to taking account of social , gender equality and environmental issues. this directive will also contribute to the european pillar of social rights , which promotes rights ensuring fair working conditions. it forms part of the eu policies and strategies relating to the promotion of decent work worldwide , including in global value chains , as referred to in the commission communication on decent work worldwide76 .


### (3) in its communication on a strong social europe for just transition75 , the commission committed to upgrading europe’s social market economy to achieve a just transition to sustainability. this directive will also contribute to the european pillar of social rights , which promotes rights ensuring fair working conditions. it forms part of the eu policies and strategies relating to the promotion of decent work worldwide , including in global value chains , as referred to in the commission communication on decent work worldwide76 . ### (3) in its communication on a strong social europe for just transition75 , the commission committed to upgrading europe’s social market economy to achieve a just transition to sustainability. this directive will also contribute to the european pillar of social rights , in particular social rights related to social dialogue , fair wages and safe work environment , which promotes rights ensuring fair working conditions. it forms part of the eu policies and strategies relating to the promotion of decent work worldwide , including in global value chains , as referred to in the commission communication on decent work worldwide76 . this directive also contributes to the effective implementation of the international covenant on economic , social and cultural rights adopted by the un general assembly resolution 2200a (xxi) , in particular its article 7 related to the right to just and favourable conditions of work


### (6) the concept of human rights due diligence was specified and further developed in the oecd guidelines for multinational enterprises80 which extended the application of due diligence to environmental and governance topics. the oecd guidance on responsible business conduct and sectoral guidance81 are internationally recognised frameworks setting out practical due diligence steps to help companies identify , prevent , mitigate and account for how they address actual and potential impacts in their operations , value chains and other business relationships. the concept of due diligence is also embedded in the recommendations of the international labour organisation (ilo) tripartite declaration of principles concerning multinational enterprises and social policy.82 ### (6) the concept of human rights due diligence was specified and further developed in the oecd guidelines for multinational enterprises80 which extended the application of due diligence to environmental and governance topics. the oecd guidance on responsible business conduct and sectoral guidance81 are internationally recognised frameworks setting out practical due diligence steps to help companies identify , prevent , mitigate and account for how they address actual and potential impacts in their operations , value chains and other business relationships. the oecd guidelines also set out the requirement for companies to engage with relevant stakeholders in order to provide meaningful opportunities for their views to be taken into account in relation to planning and decision making for projects or other activities that may significantly impact local communities. the concept of due diligence is also embedded in the recommendations of the international labour organisation (ilo) tripartite declaration of principles concerning multinational enterprises and social policy.82


### (15) companies should take appropriate steps to set up and carry out due diligence measures , with respect to their own operations , their subsidiaries , as well as their established direct and indirect business relationships throughout their value chains in accordance with the provisions of this directive. this directive should not require companies to guarantee , in all circumstances , that adverse impacts will never occur or that they will be stopped. for example with respect to business relationships where the adverse impact results from state intervention , the company might not be in a position to arrive at such results. therefore , the main obligations in this directive should be ‘obligations of means’. the company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. account should be taken of the specificities of the company’s value chain , sector or geographical area in which its value chain partners operate , the company’s power to influence its direct and indirect business relationships , and whether the company could increase its power of influence. ### (15) companies should take appropriate steps to set up and carry out due diligence measures , with respect to their own operations , their subsidiaries , as well as their established direct and indirect business relationships throughout their value chains in accordance with the provisions of this directive. this directive should not require companies to guarantee , in all circumstances , that adverse impacts will never occur or that they will be stopped. for example with respect to business relationships where the adverse impact results from state intervention , the company might not be in a position to arrive at such results. the company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. account should be taken of the specificities of the company’s value chain , sector or geographical area in which its value chain partners operate , the company’s power to influence its direct and indirect business relationships , and whether the company could increase its power of influence.


### (15) companies should take appropriate steps to set up and carry out due diligence measures , with respect to their own operations , their subsidiaries , as well as their established direct and indirect business relationships throughout their value chains in accordance with the provisions of this directive. this directive should not require companies to guarantee , in all circumstances , that adverse impacts will never occur or that they will be stopped. for example with respect to business relationships where the adverse impact results from state intervention , the company might not be in a position to arrive at such results. therefore , the main obligations in this directive should be ‘obligations of means’. the company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. account should be taken of the specificities of the company’s value chain , sector or geographical area in which its value chain partners operate , the company’s power to influence its direct and indirect business relationships , and whether the company could increase its power of influence. ### (15) companies should take appropriate steps to set up and carry out due diligence measures , with respect to their own operations , their subsidiaries , as well as their business relationships throughout their value chains in accordance with the provisions of this directive. this directive should not require companies to guarantee , in all circumstances , that adverse impacts will never occur or that they will be stopped. for example with respect to business relationships where the adverse impact results from state intervention , the company might not be in a position to arrive at such results. therefore , the main obligations in this directive should be ‘obligations of means’. the company should take the appropriate measures which can reasonably be expected to result in prevention or minimisation of the adverse impact under the circumstances of the specific case. account should be taken of the specificities of the company’s value chain , sector or geographical area in which its value chain partners operate , the company’s power to influence its direct and indirect business relationships , and whether the company could increase its power of influence.


### (19) as regards regulated financial undertakings providing loan , credit , or other financial services , “value chain” with respect to the provision of such services should be limited to the activities of the clients receiving such services , and the subsidiaries thereof whose activities are linked to the contract in question. clients that are households and natural persons not acting in a professional or business capacity , as well as small and medium sized undertakings , should not be considered to be part of the value chain. the activities of the companies or other legal entities that are included in the value chain of that client should not be covered. ### (19) clients that are households and natural persons not acting in a professional or business capacity should not be considered to be part of the value chain.


### (19) as regards regulated financial undertakings providing loan , credit , or other financial services , “value chain” with respect to the provision of such services should be limited to the activities of the clients receiving such services , and the subsidiaries thereof whose activities are linked to the contract in question. clients that are households and natural persons not acting in a professional or business capacity , as well as small and medium sized undertakings , should not be considered to be part of the value chain. the activities of the companies or other legal entities that are included in the value chain of that client should not be covered. ### deleted


### (20) in order to allow companies to properly identify the adverse impacts in their value chain and to make it possible for them to exercise appropriate leverage , the due diligence obligations should be limited in this directive to established business relationships. for the purpose of this directive , established business relationships should mean such direct and indirect business relationships which are , or which are expected to be lasting , in view of their intensity and duration and which do not represent a negligible or ancillary part of the value chain. the nature of business relationships as “established” should be reassessed periodically , and at least every 12 months. if the direct business relationship of a company is established , then all linked indirect business relationships should also be considered as established regarding that company. ### deleted


### (21) under this directive , eu companies with more than 500 employees on average and a worldwide net turnover exceeding eur 150 million in the financial year preceding the last financial year should be required to comply with due diligence. as regards companies which do not fulfil those criteria , but which had more than 250 employees on average and more than eur 40 million worldwide net turnover in the financial year preceding the last financial year and which operate in one or more high-impact sectors , due diligence should apply 2 years after the end of the transposition period of this directive , in order to provide for a longer adaptation period. in order to ensure a proportionate burden , companies operating in such high-impact sectors should be required to comply with more targeted due diligence focusing on severe adverse impacts. temporary agency workers , including those posted under article 1(3) , point (c) , of directive 96/71/ec , as amended by directive 2018/957/eu of the european parliament and of the council103 , should be included in the calculation of the number of employees in the user company. posted workers under article 1(3) , points (a) and (b) , of directive 96/71/ec , as amended by directive 2018/957/eu , should only be included in the calculation of the number of employees of the sending company. ### (21) under this directive , eu companies with more than 250 employees on average and a worldwide net turnover exceeding eur 40 million and/or a balance sheet of more than eur 20 million in the financial year preceding the last financial year should be required to comply with due diligence. as regards companies which do not fulfil those criteria , but had more than 10 employees on average , had a net worldwide turnover of more than eur 700 000 and/or a balance sheet of more than eur 350 000 in the last financial year , and are publicly listed on the stock exchange or which operate in one or more high-impact sectors , due diligence should apply 2 years after the end of the transposition period of this directive , in order to provide for a longer adaptation period. temporary agency workers , including those posted under article 1(3) , point (c) , of directive 96/71/ec , as amended by directive 2018/957/eu of the european parliament and of the council103 , should be included in the calculation of the number of employees in the user company. posted workers under article 1(3) , points (a) and (b) , of directive 96/71/ec , as amended by directive 2018/957/eu , should only be included in the calculation of the number of employees of the sending company.


### (22) in order to reflect the priority areas of international action aimed at tackling human rights and environmental issues , the selection of high-impact sectors for the purposes of this directive should be based on existing sectoral oecd due diligence guidance. the following sectors should be regarded as high-impact for the purposes of this directive: the manufacture of textiles , leather and related products (including footwear) , and the wholesale trade of textiles , clothing and footwear; agriculture , forestry , fisheries (including aquaculture) , the manufacture of food products , and the wholesale trade of agricultural raw materials , live animals , wood , food , and beverages; the extraction of mineral resources regardless of where they are extracted from (including crude petroleum , natural gas , coal , lignite , metals and metal ores , as well as all other , non-metallic minerals and quarry products) , the manufacture of basic metal products , other non-metallic mineral products and fabricated metal products (except machinery and equipment) , and the wholesale trade of mineral resources , basic and intermediate mineral products (including metals and metal ores , construction materials , fuels , chemicals and other intermediate products). as regards the financial sector , due to its specificities , in particular as regards the value chain and the services offered , even if it is covered by sector-specific oecd guidance , it should not form part of the high-impact sectors covered by this directive. at the same time , in this sector , the broader coverage of actual and potential adverse impacts should be ensured by also including very large companies in the scope that are regulated financial undertakings , even if they do not have a legal form with limited liability. ### (22) in order to reflect the priority areas of international action aimed at tackling human rights and environmental issues , the selection of high-impact sectors for the purposes of this directive should be based on existing sectoral oecd due diligence guidance. the following sectors should be regarded as high-impact for the purposes of this directive: the manufacture of textiles , leather and related products (including footwear) , and the wholesale trade of textiles , clothing and footwear; agriculture , forestry , fisheries (including aquaculture) , the manufacture of food products , and the wholesale trade of agricultural raw materials , live animals , animal products , wood , food , and beverages; energy , the extraction , transport and handling of mineral resources regardless of where they are extracted from (including crude petroleum , natural gas , coal , lignite , metals and metal ores , as well as all other , non-metallic minerals and quarry products) , the manufacture of basic metal products , other non-metallic mineral products and fabricated metal products (except machinery and equipment) , and the wholesale trade of mineral resources , basic and intermediate mineral products (including metals and metal ores , construction materials , fuels , chemicals and other intermediate products).


### (22) in order to reflect the priority areas of international action aimed at tackling human rights and environmental issues , the selection of high-impact sectors for the purposes of this directive should be based on existing sectoral oecd due diligence guidance. the following sectors should be regarded as high-impact for the purposes of this directive: the manufacture of textiles , leather and related products (including footwear) , and the wholesale trade of textiles , clothing and footwear; agriculture , forestry , fisheries (including aquaculture) , the manufacture of food products , and the wholesale trade of agricultural raw materials , live animals , wood , food , and beverages; the extraction of mineral resources regardless of where they are extracted from (including crude petroleum , natural gas , coal , lignite , metals and metal ores , as well as all other , non-metallic minerals and quarry products) , the manufacture of basic metal products , other non-metallic mineral products and fabricated metal products (except machinery and equipment) , and the wholesale trade of mineral resources , basic and intermediate mineral products (including metals and metal ores , construction materials , fuels , chemicals and other intermediate products). as regards the financial sector , due to its specificities , in particular as regards the value chain and the services offered , even if it is covered by sector-specific oecd guidance , it should not form part of the high-impact sectors covered by this directive. at the same time , in this sector , the broader coverage of actual and potential adverse impacts should be ensured by also including very large companies in the scope that are regulated financial undertakings , even if they do not have a legal form with limited liability. ### (22) in order to reflect the priority areas of international action aimed at tackling human rights and environmental issues , the selection of high-impact sectors for the purposes of this directive should be based on existing sectoral oecd due diligence guidance. the following sectors should be regarded as high-impact for the purposes of this directive: the manufacture of textiles , leather and related products (including footwear) , and the wholesale trade of textiles , clothing and footwear; agriculture , forestry , fisheries (including aquaculture) , the manufacture of food products , and the wholesale trade of agricultural raw materials , live animals , wood , food , and beverages; the extraction of mineral resources regardless of where they are extracted from (including crude petroleum , natural gas , coal , lignite , metals and metal ores , as well as all other , non-metallic minerals and quarry products) , the manufacture of basic metal products , other non-metallic mineral products and fabricated metal products (except machinery and equipment) , and the wholesale trade of mineral resources , basic and intermediate mineral products (including metals and metal ores , construction materials , fuels , chemicals and other intermediate products) and the manufacture of weapons and ammunition , including dual-use items , and the manufacture of military fighting vehicles. as regards the financial sector , due to its specificities , in particular as regards the value chain and the services offered , even if it is covered by sector-specific oecd guidance , it should not form part of the high-impact sectors covered by this directive. at the same time , in this sector , the broader coverage of actual and potential adverse impacts should be ensured by also including very large companies in the scope that are regulated financial undertakings , even if they do not have a legal form with limited liability.


### (22) in order to reflect the priority areas of international action aimed at tackling human rights and environmental issues , the selection of high-impact sectors for the purposes of this directive should be based on existing sectoral oecd due diligence guidance. the following sectors should be regarded as high-impact for the purposes of this directive: the manufacture of textiles , leather and related products (including footwear) , and the wholesale trade of textiles , clothing and footwear; agriculture , forestry , fisheries (including aquaculture) , the manufacture of food products , and the wholesale trade of agricultural raw materials , live animals , wood , food , and beverages; the extraction of mineral resources regardless of where they are extracted from (including crude petroleum , natural gas , coal , lignite , metals and metal ores , as well as all other , non-metallic minerals and quarry products) , the manufacture of basic metal products , other non-metallic mineral products and fabricated metal products (except machinery and equipment) , and the wholesale trade of mineral resources , basic and intermediate mineral products (including metals and metal ores , construction materials , fuels , chemicals and other intermediate products). as regards the financial sector , due to its specificities , in particular as regards the value chain and the services offered , even if it is covered by sector-specific oecd guidance , it should not form part of the high-impact sectors covered by this directive. at the same time , in this sector , the broader coverage of actual and potential adverse impacts should be ensured by also including very large companies in the scope that are regulated financial undertakings , even if they do not have a legal form with limited liability. ### (22) in order to reflect the priority areas of international action aimed at tackling human rights and environmental issues , the selection of high-impact sectors for the purposes of this directive should be based on existing sectoral oecd due diligence guidance. the following sectors should be regarded as high-impact for the purposes of this directive: the manufacture of textiles , fur , leather and related products (including footwear) , and the wholesale trade of textiles , clothing and footwear; agriculture , forestry , fisheries (including aquaculture) , the manufacture of food products , and the wholesale trade of agricultural raw materials , live animals , wood , food , and beverages; the extraction of mineral resources regardless of where they are extracted from (including crude petroleum , natural gas , coal , lignite , metals and metal ores , as well as all other , non-metallic minerals and quarry products) , the manufacture of basic metal products , other non-metallic mineral products and fabricated metal products (except machinery and equipment) , and the wholesale trade of mineral resources , basic and intermediate mineral products (including metals and metal ores , construction materials , fuels , chemicals and other intermediate products). as regards the financial sector , due to its specificities , in particular as regards the value chain and the services offered , even if it is covered by sector-specific oecd guidance , it should not form part of the high-impact sectors covered by this directive. at the same time , in this sector , the broader coverage of actual and potential adverse impacts should be ensured by also including very large companies in the scope that are regulated financial undertakings , even if they do not have a legal form with limited liability.


### (23) in order to achieve fully the objectives of this directive addressing human rights and adverse environmental impacts with respect to companies’ operations , subsidiaries and value chains , third-country companies with significant operations in the eu should also be covered. more specifically , the directive should apply to third-country companies which generated a net turnover of at least eur 150 million in the union in the financial year preceding the last financial year or a net turnover of more than eur 40 million but less than eur 150 million in the financial year preceding the last financial year in one or more of the high-impact sectors , as of 2 years after the end of the transposition period of this directive. ### (23) in order to achieve fully the objectives of this directive addressing human rights , environmental and good governance adverse impacts with respect to companies’ operations , subsidiaries and value chains , third-country companies with significant operations in the eu should also be covered. more specifically , the directive should apply to third-country companies which generated a net turnover of at least eur 40 million in the union in the financial year preceding the last financial year or a net turnover of more than eur 10 million but less than eur 40 million in the financial year preceding the last financial year in one or more of the high-impact sectors , as of 2 years after the end of the transposition period of this directive.


### (25) in order to achieve a meaningful contribution to the sustainability transition , due diligence under this directive should be carried out with respect to adverse human rights impact on protected persons resulting from the violation of one of the rights and prohibitions as enshrined in the international conventions as listed in the annex to this directive. in order to ensure a comprehensive coverage of human rights , a violation of a prohibition or right not specifically listed in that annex which directly impairs a legal interest protected in those conventions should also form part of the adverse human rights impact covered by this directive , provided that the company concerned could have reasonably established the risk of such impairment and any appropriate measures to be taken in order to comply with the due diligence obligations under this directive , taking into account all relevant circumstances of their operations , such as the sector and operational context. due diligence should further encompass adverse environmental impacts resulting from the violation of one of the prohibitions and obligations pursuant to the international environmental conventions listed in the annex to this directive. ### (25) in order to achieve a meaningful contribution to the sustainability transition , due diligence under this directive should be carried out with respect to adverse human rights impact on protected persons resulting from the violation of one of the rights and prohibitions as enshrined in the international conventions as listed in the annex to this directive. in order to ensure a comprehensive coverage of human rights , a violation of a prohibition or right not specifically listed in that annex which directly impairs a legal interest protected in those conventions , such as safety and health principles that were added to the fundamental principles and rights at work of ilo in 2022 , should also form part of the adverse human rights impact covered by this directive , provided that the company concerned could have reasonably established the risk of such impairment and any appropriate measures to be taken in order to comply with the due diligence obligations under this directive , taking into account all relevant circumstances of their operations , such as the sector and operational context. due diligence should further encompass adverse environmental impacts resulting from the violation of one of the prohibitions and obligations pursuant to the international environmental conventions listed in the annex to this directive.


### (29) to comply with due diligence obligations , companies need to take appropriate measures with respect to identification , prevention and bringing to an end adverse impacts. an ‘appropriate measure’ should mean a measure that is capable of achieving the objectives of due diligence , commensurate with the degree of severity and the likelihood of the adverse impact , and reasonably available to the company , taking into account the circumstances of the specific case , including characteristics of the economic sector and of the specific business relationship and the company’s influence thereof , and the need to ensure prioritisation of action. in this context , in line with international frameworks , the company’s influence over a business relationship should include , on the one hand its ability to persuade the business relationship to take action to bring to an end or prevent adverse impacts (for example through ownership or factual control , market power , pre-qualification requirements , linking business incentives to human rights and environmental performance , etc.) and , on the other hand , the degree of influence or leverage that the company could reasonably exercise , for example through cooperation with the business partner in question or engagement with another company which is the direct business partner of the business relationship associated with adverse impact. ### (29) to comply with due diligence obligations , companies need to take appropriate measures with respect to identification , prevention and bringing to an end adverse impacts. an ‘appropriate measure’ should mean a measure that is capable of achieving the objectives of due diligence , commensurate with the degree of severity and the likelihood of the adverse impact , and reasonably available to the company , taking into account the circumstances of the specific case , including characteristics of the economic sector and of the specific business relationship and the company’s influence thereof , and the need to ensure prioritisation of action. in this context , in line with international frameworks , the company’s influence over a business relationship should include , on the one hand its ability to persuade the business relationship to take action to bring to an end or prevent adverse impacts (for example through ownership or factual control , market power , pre-qualification requirements , linking business incentives to human rights and environmental performance , provision for contractual penalties in the event of non-compliance with international human rights and environmental standards , etc.) and , on the other hand , the degree of influence or leverage that the company could reasonably exercise , for example through cooperation with the business partner in question or engagement with another company which is the direct business partner of the business relationship associated with adverse impact.


### (30) under the due diligence obligations set out by this directive , a company should identify actual or potential adverse human rights and environmental impacts. in order to allow for a comprehensive identification of adverse impacts , such identification should be based on quantitative and qualitative information. for instance , as regards adverse environmental impacts , the company should obtain information about baseline conditions at higher risk sites or facilities in value chains. identification of adverse impacts should include assessing the human rights , and environmental context in a dynamic way and in regular intervals: prior to a new activity or relationship , prior to major decisions or changes in the operation; in response to or anticipation of changes in the operating environment; and periodically , at least every 12 months , throughout the life of an activity or relationship. regulated financial undertakings providing loan , credit , or other financial services should identify the adverse impacts only at the inception of the contract. when identifying adverse impacts , companies should also identify and assess the impact of a business relationship’s business model and strategies , including trading , procurement and pricing practices. where the company cannot prevent , bring to an end or minimize all its adverse impacts at the same time , it should be able to prioritize its action , provided it takes the measures reasonably available to the company , taking into account the specific circumstances. ### (30) under the due diligence obligations set out by this directive , a company should identify actual or potential adverse human rights and environmental impacts. in order to allow for a comprehensive identification of adverse impacts , such identification should be based on quantitative and qualitative information. for instance , as regards adverse environmental impacts , the company should obtain information about baseline conditions at higher risk sites or facilities in value chains. identification of adverse impacts should include assessing the human rights , and environmental context in a dynamic way and in regular intervals: prior to a new activity or relationship , prior to major decisions or changes in the operation; in response to or anticipation of changes in the operating environment; and periodically , at least every 12 months , throughout the life of an activity or relationship. when identifying adverse impacts , companies should also identify and assess the impact of a business relationship’s business model and strategies , including trading , procurement and pricing practices. where the company cannot prevent , bring to an end or minimize all its adverse impacts at the same time , it should be able to prioritize its action , provided it takes the measures reasonably available to the company , taking into account the specific circumstances.


### (30) under the due diligence obligations set out by this directive , a company should identify actual or potential adverse human rights and environmental impacts. in order to allow for a comprehensive identification of adverse impacts , such identification should be based on quantitative and qualitative information. for instance , as regards adverse environmental impacts , the company should obtain information about baseline conditions at higher risk sites or facilities in value chains. identification of adverse impacts should include assessing the human rights , and environmental context in a dynamic way and in regular intervals: prior to a new activity or relationship , prior to major decisions or changes in the operation; in response to or anticipation of changes in the operating environment; and periodically , at least every 12 months , throughout the life of an activity or relationship. regulated financial undertakings providing loan , credit , or other financial services should identify the adverse impacts only at the inception of the contract. when identifying adverse impacts , companies should also identify and assess the impact of a business relationship’s business model and strategies , including trading , procurement and pricing practices. where the company cannot prevent , bring to an end or minimize all its adverse impacts at the same time , it should be able to prioritize its action , provided it takes the measures reasonably available to the company , taking into account the specific circumstances. ### (30) under the due diligence obligations set out by this directive , a company should identify actual or potential adverse human rights and environmental impacts. in order to allow for a comprehensive identification of adverse impacts , such identification should be based on quantitative and qualitative information. for instance , as regards adverse environmental impacts , the company should obtain information about baseline conditions at higher risk sites or facilities in value chains. identification of adverse impacts should include assessing the human rights , and environmental context in a dynamic way and in regular intervals: prior to a new activity or relationship , prior to major decisions or changes in the operation; in response to or anticipation of changes in the operating environment; and periodically , at least every 12 months , throughout the life of an activity or relationship. free , prior and informed consent of indigenous peoples should be a pre-requisit for any activity that affects their lands , territories and natural resources. regulated financial undertakings providing loan , credit , or other financial services should identify the adverse impacts only at the inception of the contract. when identifying adverse impacts , companies should also identify and assess the impact of a business relationship’s business model and strategies , including trading , procurement and pricing practices. where the company cannot prevent , bring to an end or minimize all its adverse impacts at the same time , it should be able to prioritize its action , provided it takes the measures reasonably available to the company , taking into account the specific circumstances.


### (31) in order to avoid undue burden on the smaller companies operating in high-impact sectors which are covered by this directive , those companies should only be obliged to identify those actual or potential severe adverse impacts that are relevant to the respective sector. ### deleted


### (32) in line with international standards , prevention and mitigation as well as bringing to an end and minimisation of adverse impacts should take into account the interests of those adversely impacted. in order to enable continuous engagement with the value chain business partner instead of termination of business relations (disengagement) and possibly exacerbating adverse impacts , this directive should ensure that disengagement is a last-resort action , in line with the union`s policy of zero-tolerance on child labour. terminating a business relationship in which child labour was found could expose the child to even more severe adverse human rights impacts. this should therefore be taken into account when deciding on the appropriate action to take. ### (32) in line with international standards , prevention and mitigation as well as bringing to an end and minimisation of adverse impacts should take into account the interests of those adversely impacted. in order to enable continuous engagement with the value chain business partner instead of termination of business relations (disengagement) and possibly exacerbating adverse impacts , this directive should ensure that disengagement is a last-resort action , in line with the union`s policy of zero-tolerance on child labour. terminating a business relationship in which child labour was found could expose the child to even more severe adverse human rights impacts. this should therefore be taken into account when deciding on the appropriate action to take. for instance , contributions to ending the child labour should include adjusting pricing practices to ensure a decent living of families and farmers , supporting children’s access to education and require the supplier to avoid child labour.


### (32) in line with international standards , prevention and mitigation as well as bringing to an end and minimisation of adverse impacts should take into account the interests of those adversely impacted. in order to enable continuous engagement with the value chain business partner instead of termination of business relations (disengagement) and possibly exacerbating adverse impacts , this directive should ensure that disengagement is a last-resort action , in line with the union`s policy of zero-tolerance on child labour. terminating a business relationship in which child labour was found could expose the child to even more severe adverse human rights impacts. this should therefore be taken into account when deciding on the appropriate action to take. ### (32) in line with international standards , prevention and mitigation as well as bringing to an end and minimisation of adverse impacts should primarily take into account the interests of workers and those adversely impacted. this directive should ensure that all appropriate measures are taken to prevent , mitigate and put an end to potential or actual adverse impacts. termination of business relations (disengagement) should only be a last resort , so as not to risk exacerbating adverse impacts , including in line with the union`s policy of zero-tolerance on child labour. moreover , the termination of a business relationship does not affect the liability of an undertaking for the actual impacts generated during the relationship. as regards the termination of a business relationship in which child labour was found , disengagement could expose the child to even more severe adverse human rights impacts. the interests of children should therefore be taken into account as a first step when deciding on the appropriate action to take to prevent or mitigate such adverse effects. in the case of disengagement , member states must ensure that reparations include financial compensation , guarantees of non-recurrence and measures to support children’s recovery and reintegration into school.


### (32) in line with international standards , prevention and mitigation as well as bringing to an end and minimisation of adverse impacts should take into account the interests of those adversely impacted. in order to enable continuous engagement with the value chain business partner instead of termination of business relations (disengagement) and possibly exacerbating adverse impacts , this directive should ensure that disengagement is a last-resort action , in line with the union`s policy of zero-tolerance on child labour. terminating a business relationship in which child labour was found could expose the child to even more severe adverse human rights impacts. this should therefore be taken into account when deciding on the appropriate action to take. ### (32) in line with international standards , prevention and mitigation as well as bringing to an end and remediation of adverse impacts should take into account the interests of those adversely impacted.


### (34) so as to comply with the prevention and mitigation obligation under this directive , companies should be required to take the following actions , where relevant. where necessary due to the complexity of prevention measures , companies should develop and implement a prevention action plan. companies should seek to obtain contractual assurances from a direct partner with whom they have an established business relationship that it will ensure compliance with the code of conduct or the prevention action plan , including by seeking corresponding contractual assurances from its partners to the extent that their activities are part of the companies’ value chain. the contractual assurances should be accompanied by appropriate measures to verify compliance. to ensure comprehensive prevention of actual and potential adverse impacts , companies should also make investments which aim to prevent adverse impacts , provide targeted and proportionate support for an sme with which they have an established business relationship such as financing , for example , through direct financing , low-interest loans , guarantees of continued sourcing , and assistance in securing financing , to help implement the code of conduct or prevention action plan , or technical guidance such as in the form of training , management systems upgrading , and collaborate with other companies. ### (34) so as to comply with the prevention and mitigation obligation under this directive , companies should be required to take the following actions. companies should develop and implement a prevention action plan. companies should engage and support business partners with whom they have a business relationship throughout their entire value chains in order to obtain assurance , contractual or otherwise , of implementation of the prevention action plan of the company concerned. possible contractual assurances should be accompanied by appropriate measures to verify compliance. to ensure comprehensive prevention of actual and potential adverse impacts , companies should also adapt their business models and strategies , including trading , procurement , purchasing and pricing practices , and make investments which aim to prevent adverse impacts , provide targeted and proportionate support for partners , suppliers , including smes such as financing , for example , through direct financing , low-interest loans , guarantees of continued sourcing , and assistance in securing financing , to help implement the prevention action plan , or technical guidance such as in the form of training ,management systems upgrading , and collaborate with other companies.


### (35) in order to reflect the full range of options for the company in cases where potential impacts could not be addressed by the described prevention or minimisation measures , this directive should also refer to the possibility for the company to seek to conclude a contract with the indirect business partner , with a view to achieving compliance with the company’s code of conduct or a prevention action plan , and conduct appropriate measures to verify compliance of the indirect business relationship with the contract. ### deleted


### (36) in order to ensure that prevention and mitigation of potential adverse impacts is effective , companies should prioritize engagement with business relationships in the value chain , instead of terminating the business relationship , as a last resort action after attempting at preventing and mitigating adverse potential impacts without success. however , the directive should also , for cases where potential adverse impacts could not be addressed by the described prevention or mitigation measures , refer to the obligation for companies to refrain from entering into new or extending existing relations with the partner in question and , where the law governing their relations so entitles them to , to either temporarily suspend commercial relationships with the partner in question , while pursuing prevention and minimisation efforts , if there is reasonable expectation that these efforts are to succeed in the short-term; or to terminate the business relationship with respect to the activities concerned if the potential adverse impact is severe. in order to allow companies to fulfil that obligation , member states should provide for the availability of an option to terminate the business relationship in contracts governed by their laws. it is possible that prevention of adverse impacts at the level of indirect business relationships requires collaboration with another company , for example a company which has a direct contractual relationship with the supplier. in some instances , such collaboration could be the only realistic way of preventing adverse impacts , in particular , where the indirect business relationship is not ready to enter into a contract with the company. in these instances , the company should collaborate with the entity which can most effectively prevent or mitigate adverse impacts at the level of the indirect business relationship while respecting competition law. ### (36) in order to ensure that prevention and mitigation of potential adverse impacts is effective , companies should prioritize engagement with business relationships in the value chain , attempting at preventing and mitigating adverse potential impacts. the directive should also , for cases where potential adverse impacts could not be addressed by the described prevention or mitigation measures , refer to the obligation for companies to refrain from entering into new or extending existing relations with the partner in question and to either temporarily suspend commercial relationships with the partner in question , while pursuing prevention and minimisation efforts , if there is reasonable expectation that these efforts are to succeed in the short-term; or to terminate the business relationship with respect to the activities concerned. in order to allow companies to fulfil that obligation , member states should provide for the availability of an option to terminate the business relationship in contracts governed by their laws. it is possible that prevention of adverse impacts at the level of indirect business relationships requires collaboration with another company , for example a company which has a direct contractual relationship with the supplier. in some instances , such collaboration could be the only realistic way of preventing adverse impacts , in particular , where the indirect business relationship is not ready to enter into a contract with the company. in these instances , the company should collaborate with the entity which can most effectively prevent or mitigate adverse impacts at the level of the indirect business relationship while respecting competition law.


### (38) under the due diligence obligations set out by this directive , if a company identifies actual human rights or environmental adverse impacts , it should take appropriate measures to bring those to an end. it can be expected that a company is able to bring to an end actual adverse impacts in their own operations and in subsidiaries. however , it should be clarified that , as regards established business relationships , where adverse impacts cannot be brought to an end , companies should minimise the extent of such impacts. minimisation of the extent of adverse impacts should require an outcome that is the closest possible to bringing the adverse impact to an end. to provide companies with legal clarity and certainty , this directive should define which actions companies should be required to take for bringing actual human rights and environmental adverse impacts to an end and minimisation of their extent , where relevant depending on the circumstances. ### (38) under the due diligence obligations set out by this directive , if a company identifies actual human rights or environmental adverse impacts , it is obliged to take appropriate measures to bring those to an end. it can be expected that a company is able to bring to an end actual adverse impacts in their own operations and in subsidiaries. however , it should be clarified that , as regards established business relationships , where adverse impacts cannot be brought to an end , companies should minimise the extent of such impacts. minimisation of the extent of adverse impacts should require an outcome that is the closest possible to bringing the adverse impact to an end. to provide companies with legal clarity and certainty , this directive should define which actions companies should be required to take for bringing actual human rights and environmental adverse impacts to an end and minimisation of their extent , where relevant depending on the circumstances.


### (39) so as to comply with the obligation of bringing to an end and minimising the extent of actual adverse impacts under this directive , companies should be required to take the following actions , where relevant. they should neutralise the adverse impact or minimise its extent , with an action proportionate to the significance and scale of the adverse impact and to the contribution of the company’s conduct to the adverse impact. where necessary due to the fact that the adverse impact cannot be immediately brought to an end , companies should develop and implement a corrective action plan with reasonable and clearly defined timelines for action and qualitative and quantitative indicators for measuring improvement. companies should also seek to obtain contractual assurances from a direct business partner with whom they have an established business relationship that they will ensure compliance with the company’s code of conduct and , as necessary , a prevention action plan , including by seeking corresponding contractual assurances from its partners , to the extent that their activities are part of the company’s value chain. the contractual assurances should be accompanied by the appropriate measures to verify compliance. finally , companies should also make investments aiming at ceasing or minimising the extent of adverse impact , provide targeted and proportionate support for an smes with which they have an established business relationship and collaborate with other entities , including , where relevant , to increase the company’s ability to bring the adverse impact to an end. ### (39) so as to comply with the obligation of bringing to an end and minimising the extent of actual adverse impacts under this directive , companies should be required to take the following actions. they should neutralise the adverse impact or minimise its extent , with an action proportionate to the significance and scale of the adverse impact and to the contribution of the company’s conduct to the adverse impact. companies should develop and implement a corrective action plan with reasonable and clearly defined timelines for action and qualitative and quantitative indicators for measuring improvement. companies should also seek to obtain contractual assurances from a direct business partner with whom they have an established business relationship that they will ensure compliance with the company’s code of conduct and , as necessary , a prevention action plan , including by seeking corresponding contractual assurances from its partners , to the extent that their activities are part of the company’s value chain. the contractual assurances should be accompanied by the appropriate measures to verify compliance. finally , companies should also make investments aiming at ceasing or minimising the extent of adverse impact , provide targeted and proportionate support for an smes with which they have an established business relationship and collaborate with other entities , including , where relevant , to increase the company’s ability to bring the adverse impact to an end.


### (40) in order to reflect the full range of options for the company in cases where actual impacts could not be addressed by the described measures , this directive should also refer to the possibility for the company to seek to conclude a contract with the indirect business partner , with a view to achieving compliance with the company’s code of conduct or a corrective action plan , and conduct appropriate measures to verify compliance of the indirect business relationship with the contract. ### deleted


### (41) in order to ensure that bringing actual adverse impacts to an end or minimising them is effective , companies should prioritize engagement with business relationships in the value chain , instead of terminating the business relationship , as a last resort action after attempting at bringing actual adverse impacts to an end or minimising them without success. however , this directive should also , for cases where actual adverse impacts could not be brought to an end or adequately mitigated by the described measures , refer to the obligation for companies to refrain from entering into new or extending existing relations with the partner in question and , where the law governing their relations so entitles them to , to either temporarily suspend commercial relationships with the partner in question , while pursuing efforts to bring to an end or minimise the extent of the adverse impact , or terminate the business relationship with respect to the activities concerned , if the adverse impact is considered severe. in order to allow companies to fulfil that obligation , member states should provide for the availability of an option to terminate the business relationship in contracts governed by their laws. ### (41) in cases where actual adverse impacts could not be brought to an end or adequately mitigated by the described measures , companies should be obliged to refrain from entering into new or extending existing relations with the partner in question or to temporarily suspend commercial relationships with the partner in question , while pursuing efforts to bring to an end or minimise the extent of the adverse impact. in order to allow companies to fulfil that obligation , member states should provide for the availability of an option to suspend or terminate the business relationship in contracts governed by their laws. however , the liability of the company for damages arising previously under this directive should remain unaffected , in particular for the purposes of compensation and reparation.


### (42) companies should provide the possibility for persons and organisations to submit complaints directly to them in case of legitimate concerns regarding actual or potential human rights and environmental adverse impacts. organisations who could submit such complaints should include trade unions and other workers’ representatives representing individuals working in the value chain concerned and civil society organisations active in the areas related to the value chain concerned where they have knowledge about a potential or actual adverse impact. companies should establish a procedure for dealing with those complaints and inform workers , trade unions and other workers’ representatives , where relevant , about such processes. recourse to the complaints and remediation mechanism should not prevent the complainant from having recourse to judicial remedies. in accordance with international standards , complaints should be entitled to request from the company appropriate follow-up on the complaint and to meet with the company’s representatives at an appropriate level to discuss potential or actual severe adverse impacts that are the subject matter of the complaint. this access should not lead to unreasonable solicitations of companies. ### (42) companies should provide the possibility for persons and organisations to submit complaints directly to them in case of legitimate concerns regarding actual or potential human rights and environmental adverse impacts. organisations who could submit such complaints should include but are not limited to workers and their representatives , local communities , indigenous peoples , citizens’ associations , trade unions , human rights and environmental defenders , civil society organisations active in the areas related to the value chain concerned where they have knowledge about a potential or actual adverse impact. companies should establish a procedure for dealing with those complaints and inform workers , trade unions and other workers’ representatives , where relevant , about such processes. recourse to the complaints and remediation mechanism should not prevent the complainant from having recourse to judicial remedies. in accordance with international standards , complaints should be entitled to request from the company appropriate follow-up on the complaint and to meet with the company’s representatives at an appropriate level to discuss potential or actual severe adverse impacts that are the subject matter of the complaint.


### (42) companies should provide the possibility for persons and organisations to submit complaints directly to them in case of legitimate concerns regarding actual or potential human rights and environmental adverse impacts. organisations who could submit such complaints should include trade unions and other workers’ representatives representing individuals working in the value chain concerned and civil society organisations active in the areas related to the value chain concerned where they have knowledge about a potential or actual adverse impact. companies should establish a procedure for dealing with those complaints and inform workers , trade unions and other workers’ representatives , where relevant , about such processes. recourse to the complaints and remediation mechanism should not prevent the complainant from having recourse to judicial remedies. in accordance with international standards , complaints should be entitled to request from the company appropriate follow-up on the complaint and to meet with the company’s representatives at an appropriate level to discuss potential or actual severe adverse impacts that are the subject matter of the complaint. this access should not lead to unreasonable solicitations of companies. ### (42) companies should provide the possibility for persons and organisations to submit complaints directly to them in case of concerns regarding actual or potential human rights and environmental adverse impacts. organisations who could submit such complaints should include trade unions and other workers’ representatives , civil society organisations and individuals who are affected or have reasonable grounds to believe that they might be affected by an adverse impact. companies should establish a procedure for dealing with those complaints and inform workers , trade unions and other workers’ representatives , where relevant , about such processes. recourse to the complaints and remediation mechanism should not prevent the complainant from having recourse to judicial remedies. in accordance with international standards , complaints should be entitled to request from the company appropriate follow-up on the complaint and to meet with the company’s representatives at an appropriate level to discuss potential or actual severe adverse impacts that are the subject matter of the complaint.


### (42) companies should provide the possibility for persons and organisations to submit complaints directly to them in case of legitimate concerns regarding actual or potential human rights and environmental adverse impacts. organisations who could submit such complaints should include trade unions and other workers’ representatives representing individuals working in the value chain concerned and civil society organisations active in the areas related to the value chain concerned where they have knowledge about a potential or actual adverse impact. companies should establish a procedure for dealing with those complaints and inform workers , trade unions and other workers’ representatives , where relevant , about such processes. recourse to the complaints and remediation mechanism should not prevent the complainant from having recourse to judicial remedies. in accordance with international standards , complaints should be entitled to request from the company appropriate follow-up on the complaint and to meet with the company’s representatives at an appropriate level to discuss potential or actual severe adverse impacts that are the subject matter of the complaint. this access should not lead to unreasonable solicitations of companies. ### (42) companies should provide the possibility for persons and organisations to alert , provide early warnings and submit complaints directly to them in case of legitimate concerns regarding actual or potential human rights and environmental adverse impacts directly or indirectly related to its activity , its business and its commercial relations. the right to file a complaint may be exercised by any person or entity , namely trade unions and other workers’ representatives representing individuals working in the value chain concerned and civil society organisations. companies should establish an accessible and expeditious procedure for dealing with those complaints and inform the complainants and all stakeholders , namely , workers , trade unions and other workers’ representatives about such processes. recourse to the complaints and remediation mechanism should not prevent the complainant from having recourse to judicial remedies and effective access to justice. complaints should be entitled to request from the company appropriate follow-up on the complaint and to meet with the company’s representatives at an appropriate level to discuss potential or actual adverse impacts that are the subject matter of the complaint.


### (43) companies should monitor the implementation and effectiveness of their due diligence measures. they should carry out periodic assessments of their own operations , those of their subsidiaries and , where related to the value chains of the company , those of their established business relationships , to monitor the effectiveness of the identification , prevention , minimisation , bringing to an end and mitigation of human rights and environmental adverse impacts. such assessments should verify that adverse impacts are properly identified , due diligence measures are implemented and adverse impacts have actually been prevented or brought to an end. in order to ensure that such assessments are up-to-date , they should be carried out at least every 12 months and be revised in-between if there are reasonable grounds to believe that significant new risks of adverse impact could have arisen. ### (43) companies should monitor the implementation and effectiveness of their due diligence measures. they should carry out periodic assessments of their own operations , those of their subsidiaries and those of their business relationships , to monitor the effectiveness of the identification , prevention , minimisation , bringing to an end and mitigation and remediation of human rights and environmental adverse impacts. such assessments should verify that potential or actual adverse impacts are properly identified , due diligence measures are implemented and adverse impacts have actually been prevented or brought to an end in a timely manner. in order to ensure that such assessments are up-to-date , they should be carried out jointly with stakeholders at least every 12 months and be revised in-between if there are reasonable grounds to believe that significant new risks of adverse impact could have arisen.


### (44) like in the existing international standards set by the united nations guiding principles on business and human rights and the oecd framework , it forms part of the due diligence requirement to communicate externally relevant information on due diligence policies , processes and activities conducted to identify and address actual or potential adverse impacts , including the findings and outcomes of those activities. the proposal to amend directive 2013/34/eu as regards corporate sustainability reporting sets out relevant reporting obligations for the companies covered by this directive. in order to avoid duplicating reporting obligations , this directive should therefore not introduce any new reporting obligations in addition to those under directive 2013/34/eu for the companies covered by that directive as well as the reporting standards that should be developed under it. as regards companies that are within the scope of this directive , but do not fall under directive 2013/34/eu , in order to comply with their obligation of communicating as part of the due diligence under this directive , they should publish on their website an annual statement in a language customary in the sphere of international business. ### (44) like in the existing international standards set by the united nations guiding principles on business and human rights and the oecd framework , it forms part of the due diligence requirement to communicate externally relevant information on due diligence policies , processes and activities conducted to identify and address actual or potential adverse impacts , including the findings and outcomes of those activities. the proposal to amend directive 2013/34/eu as regards corporate sustainability reporting sets out relevant reporting obligations for the companies covered by this directive. in order to avoid duplicating reporting obligations , this directive should therefore not introduce any new reporting obligations in addition to those under directive 2013/34/eu for the companies covered by that directive as well as the reporting standards that should be developed under it. as regards companies that are within the scope of this directive , but do not fall under directive 2013/34/eu , in order to comply with their obligation of communicating as part of the due diligence under this directive , they should publish on their website all relevant information regarding this directive and up-to-date identification of all participants in its chain of value


### (46) in order to provide support and practical tools to companies or to member state authorities on how companies should fulfil their due diligence obligations , the commission , using relevant international guidelines and standards as a reference , and in consultation with member states and stakeholders , the european union agency for fundamental rights , the european environment agency , and where appropriate with international bodies having expertise in due diligence , should have the possibility to issue guidelines , including for specific sectors or specific adverse impacts. ### (46) in order to provide support and practical tools to companies or to member state authorities on how companies should fulfil their due diligence obligations , the commission , using relevant international guidelines and standards as a reference , and in consultation with member states and stakeholders , the european union agency for fundamental rights , the european environment agency , and where appropriate with international bodies having expertise in due diligence , should have the possibility to issue guidelines , including for the following aspects: specific adverse impacts , including adverse impacts on good governance; full mapping of companies’ value chains and efficient processes to monitor partners’ behaviours throughout the entire value chain; responsible and sustainable trading , purchasing and pricing policies; facilitation of access to justice for victims , including regarding collective redress , representative actions , non-discriminatory costs of proceedings and appropriate limitation periods; prevention and mitigation of retaliation risks faced by stakeholders , including human rights and environmental rights defenders , as a result of their participation; implementation of heightened due diligence in conflict-affected areas , occupation situations , and non-self-governing territories; responsible disengagement from harmful business relationships; methodology and criteria tobe used by supervisory authorities to make decisions related to administrative sanctions and nature and harmonisation of effective , proportionate and dissuasive sanctions; assessing the integrity and fitness of industry schemes and multi-stakeholder initiatives , in particular the inclusion of the perspectives of civil society and stakeholders in audits.


### (47) although smes are not included in the scope of this directive , they could be impacted by its provisions as contractors or subcontractors to the companies which are in the scope. the aim is nevertheless to mitigate financial or administrative burden on smes , many of which are already struggling in the context of the global economic and sanitary crisis. in order to support smes , member states should set up and operate , either individually or jointly , dedicated websites , portals or platforms , and member states could also financially support smes and help them build capacity. such support should also be made accessible , and where necessary adapted and extended to upstream economic operators in third countries. companies whose business partner is an sme , are also encouraged to support them to comply with due diligence measures , in case such requirements would jeopardize the viability of the sme and use fair , reasonable , non-discriminatory and proportionate requirements vis-a-vis the smes. ### (47) in order to support smes , member states should set up and operate , either individually or jointly , dedicated websites , portals or platforms , and member states could also financially support smes and help them build capacity. such support should also be made accessible , and where necessary adapted and extended to upstream economic operators in third countries. companies whose business partner is an sme , are also encouraged to support them to comply with due diligence measures , in case such requirements would jeopardize the viability of the sme and use fair , reasonable , non-discriminatory and proportionate requirements vis-a-vis the smes.


### (50) in order to ensure that this directive effectively contributes to combating climate change , companies should adopt a plan to ensure 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 °c in line with the paris agreement. in case climate is or should have been identified as a principal risk for or a principal impact of the company’s operations , the company should include emissions reduction objectives in its plan. ### (50) in order to ensure that this directive effectively contributes to combating climate change , companies should adopt a plan to ensure 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 °c in line with the paris agreement , and the objective of achieving climate neutrality by2050 as established in regulation (eu) 2021/1119. in case climate is or should have been identified as a principal risk for or a principal impact of the company’s operations , the company should include emissions reduction objectives in its plan. the plan should take into account the entire value chain and include short- , medium- and long-term targets related to sustainability matters , including absolute greenhouse gas emission reduction targets for scope 1 , 2 and 3 emissions for 2030 and reviewed every five years up to 2050 , explaining their alignment with a 1.5°c climate scenario with no or limited overshoot and whether such targets are based on science , pursuant to the latest recommendations of the ipcc and the european scientific advisory board on climate change; the plan should also include implementing actions to achieve the targets , an explanation of decarbonisation levers identified , and related financial and investment plans.


### (50) in order to ensure that this directive effectively contributes to combating climate change , companies should adopt a plan to ensure 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 °c in line with the paris agreement. in case climate is or should have been identified as a principal risk for or a principal impact of the company’s operations , the company should include emissions reduction objectives in its plan. ### (50) in order to ensure that this directive effectively contributes to combating climate change , companies should adopt a plan to ensure 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 °c in line with the paris agreement. in case climate is or should have been identified as a principal risk for or a principal impact of the company’s operations , the company should include mandatory short , medium , and long-term emission reduction targets aiming at carbon neutrality in its plan.


### (51) with a view to ensure that such emission reduction plan is properly implemented and embedded in the financial incentives of directors , the plan should be duly taken into account when setting directors’ variable remuneration , if variable remuneration is linked to the contribution of a director to the company’s business strategy and long-term interests and sustainability. ### deleted


### (53) in order to ensure the monitoring of the correct implementation of companies’ due diligence obligations and ensure the proper enforcement of this directive , member states should designate one or more national supervisory authorities. these supervisory authorities should be of a public nature , independent from the companies falling within the scope of this directive or other market interests , and free of conflicts of interest. in accordance with national law , member states should ensure appropriate financing of the competent authority. they should be entitled to carry out investigations , on their own initiative or based on complaints or substantiated concerns raised under this directive. where competent authorities under sectoral legislation exist , member states could identify those as responsible for the application of this directive in their areas of competence. they could designate authorities for the supervision of regulated financial undertaking also as supervisory authorities for the purposes of this directive. ### (53) in order to ensure the monitoring of the correct implementation of companies’ due diligence obligations and ensure the proper enforcement of this directive , member states should designate one or more national supervisory authorities. these supervisory authorities should be of a public nature , independent from the companies falling within the scope of this directive or other market interests , and free of conflicts of interest. in accordance with national law , member states should ensure appropriate financial and human resources of the competent authority , as well as ensure staff have appropriate qualifications , experience and skills in relation to human rights , good governance and the environment to perform its duties and exercise its powers. they should be entitled to require companies to disclose information and to carry out investigations , including interviews with stakeholders and on site examinations , on their own initiative or based on complaints or substantiated concerns raised under this directive. where competent authorities under sectoral legislation exist , member states could identify those as responsible for the application of this directive in their areas of competence. they could designate authorities for the supervision of regulated financial undertaking also as supervisory authorities for the purposes of this directive.


### (56) in order to ensure effective compensation of victims of adverse impacts , member states should be required to lay down rules governing the civil liability of companies for damages arising due to its failure to comply with the due diligence process. the company should be liable for damages if they failed to comply with the obligations to prevent and mitigate potential adverse impacts or to bring actual impacts to an end and minimise their extent , and as a result of this failure an adverse impact that should have been identified , prevented , mitigated , brought to an end or its extent minimised through the appropriate measures occurred and led to damage. ### (56) in order to ensure effective compensation of victims of adverse impacts , member states should be required to lay down rules governing the civil and criminal liability of companies for damages arising due to its failure to comply with the due diligence process. the company should be liable for damages if they failed to comply with the obligations to prevent and mitigate potential adverse impacts or to bring actual impacts to an end and minimise their extent , and as a result of this failure an adverse impact that should have been identified , prevented , mitigated , brought to an end or its extent minimised through the appropriate measures occurred and led to damage.


### (57) as regards damages occurring at the level of established indirect business relationships , the liability of the company should be subject to specific conditions. the company should not be liable if it carried out specific due diligence measures. however , it should not be exonerated from liability through implementing such measures in case it was unreasonable to expect that the action actually taken , including as regards verifying compliance , would be adequate to prevent , mitigate , bring to an end or minimise the adverse impact. in addition , in the assessment of the existence and extent of liability , due account is to be taken of the company’s efforts , insofar as they relate directly to the damage in question , to comply with any remedial action required of them by a supervisory authority , any investments made and any targeted support provided as well as any collaboration with other entities to address adverse impacts in its value chains. ### (57) member states should ensure that their legislation guarantees effective access to justice and to due compensation in cases covered by this directive and should remove all legal and procedural obstacles and limitations to the exercise of this right by claimants. the liability of companies under this directive should cover conduct arising from action and omission , whether intentional or negligent , and compensation may take into account the extent and severity of the damage caused and the degree of fault of the undertaking concerned , as well as the efforts made by the company to prevent , mitigate or remedy the adverse impacts on its value chain.


### (58) the liability regime does not regulate who should prove that the company’s action was reasonably adequate under the circumstances of the case , therefore this question is left to national law. ### deleted