Biodiversity law and regulation
39
[fig. 8]
COMMUNICATE HOW IMPACTS ARE ADDRESSED
IDENTIFY & ASSESS ADVERSE IMPACTS IN OPERATIONS, SUPPLY CHAINS & BUSINESS RELATIONSHIPS
5
2
1 EMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES & MANAGEMENT SYSTEMS
PROVIDE FOR OR COOPERATE IN REMEDIATION WHEN APPROPRIATE
6
TRACK IMPLEMENTATION AND RESULTS
CEASE, PREVENT OR MITIGATE ADVERSE IMPACTS
4
3
Source: OECD Guidelines
Biodiversity risk and compliance on the near-horizon
There are four major developments that look set to rapidly shift the dial on the materiality of biodiversity risk for corporates: 1. European Union Corporate Due Diligence law 2. Nature-related financial disclosures and “mainstreaming biodiversity” 3. Technological advances in remote-sensing and traceability
The draft Directive is the EU’s response to member states’ own independent legislative initiatives, and is intended to create a European-wide harmonised framework which will provide a level playing field, promote legal certainty, provide a competitive advantage to European entities in a sustainability-positive business environment, and help foster a global standard for responsible business conduct. The proposal will be presented to the European Parliament and Council for approval. Once adopted (potentially later this year) Member States will have two years to transpose the Directive into national law. The Directive would apply initially to all EU companies with more than 500 employees and EUR 150m annual turnover and, two years later, to EU companies with 250 employees and EUR 40m annual turnover in “high impact” sectors such as textiles, agriculture, and extraction, manufacturing and wholesale of mineral resources. It would also apply to non-EU or “third country” companies with EU turnover of EUR 150m or EUR 40m for high-impact sectors. Once in force, the Directive is expected to cover 13,000 EU companies and 4,000 non-EU companies. 222
The regulation and compliance burden in this space is set to increase, rapidly.
European Union Corporate Due Diligence law
Perhaps the most significant and potentially far-reaching development in this area is the proposed Directive of the European Union on Corporate Sustainability Due Diligence (the “EU Corporate Due Diligence Directive” or the “draft Directive”) which was published in draft on 23 February 2022. 221
222 Proposal for a Directive of the European Parliament and the Council on Corpo- rate Sustainability Due Diligence and Amending Directive (EU) 2019/1937, 23 February 2022.
221 European Commission, Corporate Sustainability and Due Diligence, 23 Febru- ary 2022.
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