The purpose of the minimum guarantees is to prevent investments from being labeled as sustainable when they would involve negative impacts in the area:
- Human rights, including labor rights (e.g., countering such a phenomenon as bullying),
- corrupt practices,
- non-compliance with tax regulations,
- unfair competition.
According to Article 18. of Regulation 2020/852 (Taxonomy), the fulfillment of the Minimum Guarantees is:
„ ... Compliance OECD Guidelines for Multinational Enterprises. and UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight fundamental conventions indicated in the Declaration of the International Labor Organization concerning basic principles and rights at work and the principles and rights set out in the International Charter on Human Rights.”.
Fulfillment of the Minimum Guarantees is a prerequisite for qualifying an economic activity as environmentally sustainable.
How to meet the Minimum Guarantees?
The draft Minimum Guarantees lists 2 indications of a company's failure to meet the Minimum Guarantees. These are situations in which:
- The company has not established adequate due diligence procedures for human rights, as outlined in the UN and OECD Guidelines for Multinational Enterprises.
- There are clear indications that the company is not properly implementing due diligence procedures and mechanisms, resulting in human rights violations. Data on violations should come from sources with a high level of independence and impartiality.
What can you do to prepare your company to meet the Minimum Guarantees?
The basis for fulfilling the Minimum Guarantees is the sustainability due diligence system established and in place within the organization. At the same time, the regulation of sustainability due diligence is being addressed by other regulations at the EU level, including the Corporate Sustainability Due Diligence Directive (CSDD) and the Corporate Sustainability Reporting Directive (CSRD). Regulations covering due diligence maintain consistency at the level of describing key elements of the process. To create a functioning due diligence system, a company should:
- create due diligence policies, e.g., by establishing a Code for Suppliers;
- identify actual or potential negative impacts on human rights and the environment, e.g., by conducting a materiality study;
- prevent or mitigate potential impacts;
- end or minimize the actual impact;
- Establish and maintain procedures for reporting violations;
- Monitor the effectiveness of due diligence policies and measures;
- publicly report on due diligence, e.g., by including this issue with descriptive and numerical data in the ESG report.
To comply with the Minimum Guarantees, the company should cover the following issues addressed in the OECD Guidelines for Multinational Enterprises as part of its due diligence procedures:
- Human rights
- Employment and labor relations
- Environment
- Combating corruption, incitement to corruption and extortion
- Consumer interests
- Science and technology
- Competition
Download: Draft Report on Minimal Safeguards
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