EU: Members of the Informal Group on Sustainable Finance call for robust due diligence obligations for financial institutions in Due Diligence Directive
"Joint Statement on the Corporate Sustainability Due Diligence Directive (CSDDD)", 8. Dezember 2022
As a group of stakeholders with different backgrounds but a common interest in sustainable finance, we would like to express our overall support for the European Commission’s proposal on the Corporate Sustainability Due Diligence Directive (CSDDD). [...]
With this in mind, we thank the European Commission for its efforts to clarify sustainability requirements in the EU’s regulatory framework on company law. Nonetheless, we call on the EU co-legislators to strengthen certain provisions and address the following matters in their compromise agreement:
- Directors’ oversight of due diligence and corporate sustainability strategy [...]
- Transition plans and targets to address sustainability risks [...]
- Sustainability-related incentives and long-term perspective [...]
To make sure that adverse impacts on human rights, environment, and good governance are properly identified, prevented, mitigated and brought to an end by companies, we recommend to:
- base the due diligence obligations on existing international standards, such as the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Due Diligence Guidance for Responsible Business Conduct and OECD Guidelines for Multinational Enterprises, including responsibilities on anti-corruption and tax, as well as human rights and environmental risks. This will facilitate comparison at a global level of companies’ financial and sustainability performance;
- provide more clarity on the definitions, and give additional guidance on the measures that companies are expected to implement human rights and environmental due diligence along their value chains;
- foster a risk-based approach, firmly based on the UN and OECD standards, that requires companies to address and mitigate impacts on the basis of their severity and likelihood of their business relationships; covering the companies’ subsidiaries and global value chains, both upstream and downstream;
- stipulate robust due diligence obligations for financial institutions in consideration of their specificities and various asset classes;
- enable appropriate remedy and enforcement mechanisms, including civil liability, are put in place and promote more meaningful stewardship and engagement with suppliers; and
- promote policy coherence of the Corporate Sustainability Due Diligence Directive with other related pieces of legislation, particularly UCITS, AIFMD, SFDR and CSRD by including, among others, cross-references to the other legislative acts, where appropriate.