The draft directive sets out obligations for companies to mitigate their negative impact on human rights and the environment for their business chain of activities, integrating those aspects into their management systems.

It applies to large companies with over 500 employees and a net worldwide turnover of over €150 million and non-EU companies with over €150 million net turnover generated in the EU three years from the directive's entry into force. Financial services will be temporarily excluded from the scope of the directive. 

Companies must implement "due diligence" into their policies and risk-management systems, including descriptions of their approach, processes, and code of conduct.

They must identify, assess, prevent, mitigate, stop, and remedy their negative impact and that of their upstream and downstream partners at all stages of their business (production, procurement, transport, storage, design, and distribution).

The directive also introduces penalties and civil liability for companies that fail to meet these obligations. 

Furthermore, it stipulates that companies that identify negative environmental or human rights impacts by some of their business partners will have to terminate such business relationships if they cannot be avoided or removed.

While waiting for its final adoption and implementation in the member states, companies should start verifying the compliance of their actions with the new discipline and take corrective actions given the upcoming due diligence obligation on such essential issues.