– Written by Andrea Belényi –

An EU directive is on the way that is likely to shake up the business world. The proposed legislation aims to put more emphasis on human rights and reduce negative environmental impacts in business relationships.

The complex issue of ESG is not new to many companies. Many, for example, produce sustainability reports in which they disclose their own impact on the environment and their attention to environmental and human rights aspects.

This positive change will be further reinforced by the EU directive, expected to come into force around 2025, which will make sustainability due diligence mandatory for larger companies (i.e. more than 500 employees and €150 million net turnover), and which companies will have to apply in their business relationships. Companies will be responsible for doing business only with companies that agree to operate according to the same values and principles and accept the code of ethics that the contracting company applies.

This shows that the change will also have a major impact on smaller partner and supplier firms. They will not be directly affected, but if they want to stay in touch with their larger partners, they will have to take environmental and human rights standards seriously.