Corporate social responsibility (CSR) and its ...

1 Corporate social responsibility (CSR) and its implementation into EU Company law Policy Department for Citizens Rights and Constitutional Affairs Directorate-General for Internal Policies PE - November 2020 EN STUDY Requested by the JURI committee Corporate social responsibility (CSR) and its implementation into EU Company law Abstract Building on both European Union (EU) law and chosen Member States legislation , this study, commissioned by the European Parliament s Policy Department for Citizens Rights and Constitutional Affairs at the request of the JURI Committee aims at understanding to what extent Member States are supporting the development and the implementation of CSR strategies in the business community, with particular focus on due diligence requirements.

2 It also attempts at providing some recommendations aimed at possibly developing a comprehensive and structured approach to CSR for the whole of the EU. ABOUT THE PUBLICATION This research paper was requested by the European Parliament's Committee on Legal Affairs and was commissioned, overseen and published by the Policy Department for Citizen's Rights and Constitutional Affairs. Policy Departments provide independent expertise, both in-house and externally, to support European Parliament committees and other parliamentary bodies in shaping legislation and exercising democratic scrutiny over EU external and internal policies.

3 To contact the Policy Department for Citizens Rights and Constitutional Affairs or to subscribe to its newsletter please write to: AUTHORS Kletia N OTI, (Columbia), Prof. Federico M. MUCCIARELLI, Prof. Carlo AN GELICI, Dr. Virginia dalla P O Z ZA, Mattia PILLININI. RES PONS IBLE RES EARCH ADMINIS TRATOR Udo BUX Policy Department for Citizens' Rights and Constitutional Affairs European Parliament B-1047 Brussels E-mail: EDITORIAL ASSISTANT Christina KATSARA LINGUISTIC VERSION(S) Original: EN Manuscript completed in November 2020 European Union, 2020 This document is available on the internet at.

4 N aly s es DISCLAIMER The opinions expressed in this document are the sole responsibility of the author and do not necessarily represent the official position of the European Parliament. Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the publisher is given prior notice and sent a copy. Policy D ep a rtmen t for Citizen s' Rig h ts an d Con stitu tion al Affairs _ _ _ _ __ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ __ 4 CONTENTS LIST OF ABBREVIATIONS 6 LIST OF TABLES 7 EX ECU TIVE S U MMARY 9 1.

5 IN T RO DU CT IO N 11 2. THE LEG AL FRAMEWORK : INTERNATIONAL LAW INS TRU MENTS AND THE EU LEG IS LATIVE FRAMEWORK 15 The international law instruments on CSR 15 UN Instruments: the draft United Nations Code of Conduct of Transnational Corporations and the United Nations Guiding Principles on Business and Human Rights 16 Th e ILO in ter na t ion a l ins tr um ent s 18 OECD Guidelines and Guidance 19 The approach to csr in eu law: an historical excursus 20 From the Commission s 2011 Communication to the Commission s 2019 staff working document on CSR 21 Directive 2014/95/EU: main elements 24 Directive 2014/95/EU s transposition in chosen Member States 24 Conclusions regarding the way forward with Directive 2014/95/EU 25 3.

6 DU E DILIG ENCE REQU IREMENTS IN S ELECTED MEMBER STATES AND CS R 27 The impact of company regimes 28 Due diligence requirements in selected Member States 30 Due diligence requirements in Italy 31 Due diligence requirements in France 36 Due diligence requirements in Germany 40 Due diligence requirements in the Netherlands 49 Due diligence requirements in Poland 55 Due diligence requirements in Spain 58 Certain selected good practices 64 Certain selected negative practices 68 4.

7 RECOMMENDATIONS 70 The EU should adopt cross-s ect oral EU-level legislation on mandatory due diligence requirements 70 Scope and reach of the obligation rationae materiae: framing the duty of diligence beyond reporting/transparency obligations. 72 Scope rationae personae: the initiative should not only cover large companies but also SMEs (considering their specificities). 73 Corp orate social resp on sib ility (CSR) an d its imp lemen tation in to EU Comp an y law _ _ _ _ __ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ __ 5 There should be clarity as to the business activities in the supply chain covered by the legislation 74 Comprehensive scope of human rights covered and violations covered 75 Mechanisms should be put in place for effective monitoring and enforcement of the due diligence obligation

8 When violation of contract or torts are committed 76 General procedural rules applicable and possible revisions of the EU instruments of private international law 79 5. CONCLUSIONS 83 ANNEX 87 REFER ENCES 98 Policy D ep a rtmen t for Citizen s' Rig h ts an d Con stitu tion al Affairs _ _ _ _ __ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ __ 6 LIST OF ABBREVIATIONS CSR Corporate social responsability COVID -19 Coronavirus disease 2019 ECCJ European Coalition for Corporate Ju s tice GRI Global Reporting Initiative ILO International Labour Organisation IRBC International

9 Responsible Business Conduct MNE Multi- national enterprises OECD Organisation for Economic Co-operation and Development RBC RVO Responsible Business Conduct Rijksdienst voor Ondernemend Nederland -Netherlands Enterprise Agency SCCD Supply Chain Due Diligence SDG Sustainable Development Goals S MEs Small and Medium Enterprises TUSL Testo Unico Sicurezza Lavoro - Legislative Decree Law 81/2008 Corp orate social resp on sib ility (CSR) an d its imp lemen tation in to EU Comp an y law _ _ _ _ __ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ __ 7 LIST OF TABLES Table 1 Transposition of Directive 2014/95/EU in France, Germany, Italy, Netherlands, Poland and Spain.

10 87 Policy D ep a rtmen t for Citizen s' Rig h ts an d Con stitu tion al Affairs _ _ _ _ __ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ __ 8 EXECUTIVE SUMMARY Companies activities on the environment and the society as a whole significantly affect citizens lives. As a consequence, policy-makers face the question of whether companies are to meet duties to prevent, identify, manage and mitigate any possible negative impact that they may cause on society as a whole (and thus human rights, health, environment and so on), including those impacts produced along their global supply chain.