### 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 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 , notably the blocking statute 1a .


### 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 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 and to repair the injury caused.


### 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 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 the reparation of the injury caused by it to the union and its member states , 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 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 making sure that the injury caused by the economic coercion to the union and its member states has been repaired.


### 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 , its internal market , 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.


### provide as effective or more effective relief to economic operators within the union affected by the measures of economic coercion; ### provide as effective or more effective relief to the internal market and the economic operators within the union affected by the measures of economic coercion , including via internal measures such as an ad hoc compensation fund for those economic operators;


### the potential of the measures to provide relief to economic operators within the union affected by the economic coercion; ### the potential of the measures to provide relief to economic operators within the union internal market affected by the economic coercion;


### 3. the commission may decide to apply union response measures under articles 7 or 8 consisting of restrictions on foreign direct investment or on trade in services also with regard to services supplied , or direct investments made , within the union by one or more legal persons established in the union and owned or controlled by persons of the third country concerned where necessary to achieve the objectives of this regulation. the commission may decide on such application where union response measures not covering such situations would be insufficient to effectively achieve the objectives of this regulation , in particular where such measures could be avoided. in assessing whether to adopt such a decision the commission shall consider , in addition to the criteria in paragraphs 1 and 2 , amongst other things: ### 3. the commission may decide to apply union response measures under articles 7 or 8 consisting of restrictions on foreign direct investment or on trade in services also with regard to services supplied , or direct investments made , within the union by one or more legal persons established in the union and owned or controlled by persons of the third country concerned where necessary to achieve the objectives of this regulation. the commission may decide on such application where union response measures not covering such situations would be insufficient to effectively achieve the objectives of this regulation , in particular where such measures could be avoided or circumvented. in assessing whether to adopt such a decision the commission shall consider , in addition to the criteria in paragraphs 1 and 2 , amongst other things:


### 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 and where the injury caused to the union and its member states has been repaired , the commission may suspend the application of the respective union response measure for the duration of the third country’s suspension , if it is in 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 if the third country is also suspending its measures of economic coercion as well as if the injury caused to the union and its member states by the economic coercion has been repaired. 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).


### where the economic coercion has ceased; ### where the economic coercion has ceased and the injury caused has been repaired;


### the union’s interest. ### deleted


### 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 and their potential impacts shall accompany the draft implementing 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 implementing act in accordance with article 7(6) or article 10(5) , the commission shall seek information and views from relevant stakeholders , especially the economic operators affected by the economic coercion , unless the exceptional situation of 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 entry into force of this regulation , the commission shall review this regulation and its implementation , in ensuring complementarity with the review of the blocking statute1a and the review of the enforcement regulation1b , and shall report to the european parliament and the council , notably in the relevant reporting of the chief trade enforcement officer.


### (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 , 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 supply chains , as referred to in the commission communication on decent work worldwide76 .


### (4) the behaviour of companies across all sectors of the economy is key to success in the union’s sustainability objectives as union companies , especially large ones , rely on global value chains. it is also in the interest of companies to protect human rights and the environment , in particular given the rising concern of consumers and investors regarding these topics. several initiatives fostering enterprises which support value-oriented transformation already exist on union77 , as well as national78 level. ### (4) the behaviour of companies across all sectors of the economy is key to success in the union’s sustainability objectives as union companies , especially large ones , rely on global supply chains. it is also in the interest of companies to protect human rights and the environment , in particular given the rising concern of consumers and investors regarding these topics. several initiatives fostering enterprises which support value-oriented transformation already exist on union77 , as well as national78 level.


### (12) this directive is in coherence with the eu action plan on human rights and democracy 2020-202499 . this action plan defines as a priority to strengthen the union’s engagement to actively promote the global implementation of the united nations guiding principles on business and human rights and other relevant international guidelines such as the oecd guidelines for multinational enterprises , including by advancing relevant due diligence standards. ### (12) this directive is in coherence with the eu action plan on human rights and democracy 2020-2024. this action plan defines as a priority to strengthen the union’s engagement to actively promote the global implementation of the united nations guiding principles on business and human rights and other relevant international guidelines such as the oecd guidelines for multinational enterprises , including by advancing relevant due diligence standards. the action plan also emphasises the importance of the fight against corruption along the lines of the un convention against corruption , recognising that corruption facilitates , perpetuates and institutionalises human rights violations and hinders the observance and implementation of human rights.


### (14) this directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification , prevention and mitigation , bringing to an end and minimisation of potential or actual adverse human rights and environmental impacts connected with companies’ own operations , subsidiaries and value chains. ### (14) this directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification , prevention and mitigation , bringing to an end and minimisation of potential or actual adverse human rights and environmental impacts connected with companies’ own operations , subsidiaries and supply chains.


### (14) this directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification , prevention and mitigation , bringing to an end and minimisation of potential or actual adverse human rights and environmental impacts connected with companies’ own operations , subsidiaries and value chains. ### (14) this directive aims to ensure that companies active in the internal market contribute to sustainable development and the sustainability transition of economies and societies through the identification , priorisation , prevention and mitigation , bringing to an end , remediation and minimisation of potential or actual adverse human rights and environmental impacts connected with companies’ own operations , subsidiaries and value chains.


### (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 monitored 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. when establishing which business relationship should be monitored , account should be taken of the specificities of the company’s value chain , sector or geographical area in which its value chain partners operate , and the company’s power to influence or effectively control its direct and indirect business relationships , and whether the company could increase its power of influence.


### (17) adverse human rights and environmental impact occur in companies’ own operations , subsidiaries , products , and in their value chains , in particular at the level of raw material sourcing , manufacturing , or at the level of product or waste disposal. in order for the due diligence to have a meaningful impact , it should cover human rights and environmental adverse impacts generated throughout the life-cycle of production and use and disposal of product or provision of services , at the level of own operations , subsidiaries and in value chains. ### (17) adverse human rights and environmental impact occur in companies’ own operations , subsidiaries , products , and in their supply chains , in particular at the level of raw material sourcing and manufacturing. in order for the due diligence to have an effective impact , it should cover human rights and environmental adverse impacts generated throughout the stages of production of product or provision of services , at the level of own operations , subsidiaries and in supply chains.


### (18) the value chain should cover activities related to the production of a good or provision of services by a company , including the development of the product or the service and the use and disposal of the product as well as the related activities of established business relationships of the company. it should encompass upstream established direct and indirect business relationships that design , extract , manufacture , transport , store and supply raw material , products , parts of products , or provide services to the company that are necessary to carry out the company’s activities , and also downstream relationships , including established direct and indirect business relationships , that use or receive products , parts of products or services from the company up to the end of life of the product , including inter alia the distribution of the product to retailers , the transport and storage of the product , dismantling of the product , its recycling , composting or landfilling. ### (18) the supply chain should cover activities related to the production of a good or provision of services by a company , including the development of the product or the service as well as the related activities of established business relationships of the company. it should encompass upstream established direct and indirect business relationships that design , extract , manufacture , transport , store and supply raw material , products , parts of products , or provide services to the company that are necessary to carry out the company’s activities.


### (18) the value chain should cover activities related to the production of a good or provision of services by a company , including the development of the product or the service and the use and disposal of the product as well as the related activities of established business relationships of the company. it should encompass upstream established direct and indirect business relationships that design , extract , manufacture , transport , store and supply raw material , products , parts of products , or provide services to the company that are necessary to carry out the company’s activities , and also downstream relationships , including established direct and indirect business relationships , that use or receive products , parts of products or services from the company up to the end of life of the product , including inter alia the distribution of the product to retailers , the transport and storage of the product , dismantling of the product , its recycling , composting or landfilling. ### (18) the value chain should cover activities related to the production and supply of a good or provision of services by a company , including the development of the product or the service and disposal of the product. it should encompass upstream monitored business relationships that design , extract , manufacture , transport , store and supply raw material , products , parts of products , or provide services to the company that are necessary to carry out the company’s activities , and also downstream relationships , consisting in carrying out operations for the company or on behalf of the company , such as the distribution to wholesalers or consumers , transportation , dismantling recycling of the product or landfilling of waste resulting from the operations of the company.


### (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) as regards regulated financial undertakings providing loan , credit , or other financial services , “supply 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 on the supply side. 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 supply chain. the activities of the companies or other legal entities that are included in the supply chain of that client should not be covered.


### (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. ### (20) in order to allow companies to properly identify the adverse impacts in their supply 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 supply chain. the nature of business relationships as “established” should be reassessed 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.


### (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. ### (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 monitored business relationships. business relationships will be deemed to be monitored by the company itself , based on the degree of control it has over them. for the purpose of this directive , monitored business relationships should mean such direct and indirect business relationships. the nature of business relationships as “monitored” should be reassessed periodically , and at least every 12 months.


### (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 1000 employees on average and a worldwide net turnover exceeding eur 300 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.


### (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). for the proper classification of the areas covered by the high-impact sectors listed above , the commission should present a list of nace codes for those stages of production or parts of sectors , where there is significant risks of adverse impacts on human rights and the environment. the list , which is to be developed with duly notice to the input from the sectors concerned , should be presented in a delegated act no later than one year after entry into force of this directive , together with clear guidelines including for specific sectors and specific company sizes. 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 and adverse environmental impacts with respect to companies’ operations , subsidiaries and supply 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 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 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 worldwide and at least 40 million in the union in the financial year preceding the last financial year or a net worldwide turnover of more than eur 40 million but less than eur 150 million in the financial year preceding the last financial year provided that at least 50% of its net worldwide turnover was generated in one or more of the high-impact sectors , as of 2 years after the end of the transposition period of this directive.


### (24) for defining the scope of application in relation to non-eu companies the described turnover criterion should be chosen as it creates a territorial connection between the third-country companies and the union territory. turnover is a proxy for the effects that the activities of those companies could have on the internal market. in accordance with international law , such effects justify the application of union law to third-country companies. to ensure identification of the relevant turnover of companies concerned , the methods for calculating net turnover for non-eu companies as laid down in directive (eu) 2013/34 as amended by directive (eu) 2021/2101 should be used. to ensure effective enforcement of this directive , an employee threshold should , in turn , not be applied to determine which third-country companies fall under this directive , as the notion of “employees” retained for the purposes of this directive is based on union law and could not be easily transposed outside of the union. in the absence of a clear and consistent methodology , including in accounting frameworks , to determine the employees of third-country companies , such employee threshold would therefore create legal uncertainty and would be difficult to apply for supervisory authorities. the definition of turnover should be based on directive 2013/34/eu which has already established the methods for calculating net turnover for non-union companies , as turnover and revenue definitions are similar in international accounting frameworks too. with a view to ensuring that the supervisory authority knows which third country companies generate the required turnover in the union to fall under the scope of this directive , this directive should require that a supervisory authority in the member state where the third country company’s authorised representative is domiciled or established and , where it is different , a supervisory authority in the member state in which the company generated most of its net turnover in the union in the financial year preceding the last financial year are informed that the company is a company falling under the scope of this directive. ### (24) for defining the scope of application in relation to non-eu companies the described share of turnover criterion should be chosen as it creates a territorial connection between the third-country companies and the union territory. turnover is a proxy for the effects that the activities of those companies could have on the internal market. in accordance with international law , such effects justify the application of union law to third-country companies. however , the overall worldwide net turnover threshold should be the same as that applied to companies established in the eu in order to create a level playing field between both eu and non-eu companies. to ensure identification of the relevant turnover of companies concerned , the methods for calculating net turnover for non-eu companies as laid down in directive (eu) 2013/34 as amended by directive (eu) 2021/2101 should be used. to ensure effective enforcement of this directive , an employee threshold should , in turn , not be applied to determine which third-country companies fall under this directive , as the notion of “employees” retained for the purposes of this directive is based on union law and could not be easily transposed outside of the union. in the absence of a clear and consistent methodology , including in accounting frameworks , to determine the employees of third-country companies , such employee threshold would therefore create legal uncertainty and would be difficult to apply for supervisory authorities. the definition of turnover should be based on directive 2013/34/eu which has already established the methods for calculating net turnover for non-union companies , as turnover and revenue definitions are similar in international accounting frameworks too. with a view to ensuring that the supervisory authority knows which third country companies generate the required turnover in the union to fall under the scope of this directive , this directive should require that a supervisory authority in the member state where the third country company’s authorised representative is domiciled or established and , where it is different , a supervisory authority in the member state in which the company generated most of its net turnover in the union in the financial year preceding the last financial year are informed that the company is a company falling under the scope of this directive.


### (27) in order to conduct appropriate human rights , and environmental due diligence with respect to their operations , their subsidiaries , and their value chains , companies covered by this directive should integrate due diligence into corporate policies , identify , prevent and mitigate as well as bring to an end and minimise the extent of potential and actual adverse human rights and environmental impacts , establish and maintain a complaints procedure , monitor the effectiveness of the taken measures in accordance with the requirements that are set up in this directive and communicate publicly on their due diligence. in order to ensure clarity for companies , in particular the steps of preventing and mitigating potential adverse impacts and of bringing to an end , or when this is not possible , minimising actual adverse impacts should be clearly distinguished in this directive. ### (27) in order to conduct appropriate human rights , and environmental due diligence with respect to their operations , their subsidiaries , and their supply chains , companies covered by this directive should integrate due diligence into corporate policies , identify , prevent and mitigate as well as bring to an end and minimise the extent of potential and actual adverse human rights and environmental impacts , establish and maintain a complaints procedure , monitor the effectiveness of the taken measures in accordance with the requirements that are set up in this directive and communicate publicly on their due diligence. in order to ensure clarity for companies , in particular the steps of preventing and mitigating potential adverse impacts and of bringing to an end , or when this is not possible , minimising actual adverse impacts should be clearly distinguished in this directive.


### (27) in order to conduct appropriate human rights , and environmental due diligence with respect to their operations , their subsidiaries , and their value chains , companies covered by this directive should integrate due diligence into corporate policies , identify , prevent and mitigate as well as bring to an end and minimise the extent of potential and actual adverse human rights and environmental impacts , establish and maintain a complaints procedure , monitor the effectiveness of the taken measures in accordance with the requirements that are set up in this directive and communicate publicly on their due diligence. in order to ensure clarity for companies , in particular the steps of preventing and mitigating potential adverse impacts and of bringing to an end , or when this is not possible , minimising actual adverse impacts should be clearly distinguished in this directive. ### (27) in order to conduct appropriate human rights , and environmental due diligence with respect to their operations , their subsidiaries , and their value chains , companies covered by this directive should integrate due diligence into corporate policies , identify , prioritise , prevent and mitigate as well as bring to an end , remedy and minimise the extent of potential and actual adverse human rights and environmental impacts , establish and maintain a complaints procedure , monitor the effectiveness of the taken measures in accordance with the requirements that are set up in this directive and communicate publicly on their due diligence. in order to ensure clarity for companies , in particular the steps of preventing and mitigating potential adverse impacts and of bringing to an end , or when this is not possible , minimising actual adverse impacts should be clearly distinguished in this directive.


### (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 supply 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 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. 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. 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.


### (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 information received after relevant , transparent , accessible and meaningful stakeholder engagement , as well as in additional quantitative and qualitative data. 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.


### (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 directly and 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. in cases where temporarily suspending or terminating a commercial relationship may be an option , companies should ensure that the suspension or termination does not result in a more severe impact on human rights or on the environment than the one that it intends to mitigate.


### (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 , mitigation and remediation as well as bringing to an end and minimisation of adverse impacts should fully take into account the interests and circumstances of those adversely impacted through a relevant , regular , meaningful and accessible consultation process that truly allows them to participate in the design and decision making process that directly affects them. 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.


### (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 , 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’ supply 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 , 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 , 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 a monitored 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 a monitored 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.


### (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 supply 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.


### (37) as regards direct and indirect business relationships , industry cooperation , industry schemes and multi-stakeholder initiatives can help create additional leverage to identify , mitigate , and prevent adverse impacts. therefore it should be possible for companies to rely on such initiatives to support the implementation of their due diligence obligations laid down in this directive to the extent that such schemes and initiatives are appropriate to support the fulfilment of those obligations. companies could assess , at their own initiative , the alignment of these schemes and initiatives with the obligations under this directive. in order to ensure full information on such initiatives , the directive should also refer to the possibility for the commission and the member states to facilitate the dissemination of information on such schemes or initiatives and their outcomes. the commission , in collaboration with member states , may issue guidance for assessing the fitness of industry schemes and multi-stakeholder initiatives. ### (37) as regards direct and indirect business relationships , industry cooperation , industry schemes and multi-stakeholder initiatives can help create additional leverage to identify , mitigate , and prevent adverse impacts. therefore it should be possible for companies to rely on such initiatives to support the implementation of their due diligence obligations laid down in this directive to the extent that such schemes and initiatives are appropriate to support the fulfilment of those obligations. companies could assess , at their own initiative , the alignment of these schemes and initiatives with the obligations under this directive. in order to ensure full information on such initiatives , the directive should also refer to the possibility for the commission and the member states to facilitate the dissemination of information on such schemes or initiatives and their outcomes. the commission , in collaboration with member states , shall issue guidance for assessing the fitness of industry schemes and multi-stakeholder initiatives.


### (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 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 monitored 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 , 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 supply 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 smes which , despite being exempt , decide to comply with the obligations under this directive , and 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 , 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 , 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 a monitored 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 monitored 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 , 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 , 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 a monitored 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 a monitored business relationship and collaborate with other entities , including , where relevant , to increase the company’s ability to bring the adverse impact to an end.


### (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 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 supply 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.


### (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 indications regarding actual or potential human rights and environmental adverse impacts. such complaints should be factually justified and reasonably documented. 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 , for example in written form or through meetings 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 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 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 , well-founded 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.


### (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 , where related to the supply 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 , 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 , where related to the value chains of the company , those of their monitored 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.


### (45) in order to facilitate companies’ compliance with their due diligence requirements through their value chain and limiting shifting compliance burden on sme business partners , the commission should provide guidance on model contractual clauses. ### (45) in order to facilitate companies’ compliance with their due diligence requirements through their supply chain and limiting shifting compliance burden on sme business partners , which are exempt from the obligations in this directive , the commission should provide guidance on model contractual clauses.


### (45) in order to facilitate companies’ compliance with their due diligence requirements through their value chain and limiting shifting compliance burden on sme business partners , the commission should provide guidance on model contractual clauses. ### (45) in order to facilitate companies’ compliance with their due diligence requirements through their value chain and limiting shifting compliance burden on sme business partners , the commission should provide , within the twelve months following the entry into force of the directive , guidance on model contractual clauses.


### (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 , shall issue guidelines , including for specific sectors or specific adverse impacts.


### (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) 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. some smes might want to voluntarily apply the due diligence framework. they should be incentivized to do so and rewarded for doing so. member states should , for instance , adapt their rating systems for public procurements so that candidates and tenderers who are not in the scope of the directive , notably smes , but do comply with due diligence obligation schemes are rated more positively than other tenderers who do not. member states , professional and sectoral organisations are encouraged to set up labelling systems to identify which companies falling out of the scope of this directive apply certified due diligence schemes equivalent to the obligations laid out in this directive.


### (48) in order to complement member state support to smes , the commission may build on existing eu tools , projects and other actions helping with the due diligence implementation in the eu and in third countries. it may set up new support measures that provide help to companies , including smes on due diligence requirements , including an observatory for value chain transparency and the facilitation of joint stakeholder initiatives. ### (48) in order to complement member state support to smes , which , despite being exempt , decide to comply with the obligations under this directive , the commission should build on existing eu tools , projects and other actions helping with the due diligence implementation in the eu and in third countries. it may set up new support measures that provide help to companies , including smes on due diligence requirements , including a helpdesk for smes , an observatory for supply chain transparency and the facilitation of joint stakeholder initiatives.