EU: Rapporteur on the corporate sustainability due diligence proposal calls for inclusion of financial sector & clear good governance standards
"The power of money", 15. December 2022
Good governance, bribery and corruption should be part of due diligence discussions, the rapporteur on the corporate sustainability due diligence proposal Lara Wolters told EURACTIV in an interview, reflecting on the recent allegations of bribes to EU lawmakers.
“Everyone’s head is a little bit elsewhere with what is going on this week,” said MEP Wolters, member of the same party group of those investigated and rapporteur on the directive to make companies accountable for human rights and environmental violations in their value chains.
“We often talk about environment, social standards and human rights, but I think that due diligence is also about proactively checking actually which are the companies that we’re dealing with down the line,” she said, adding that this has become even more relevant given the recent developments around Qatargate.
In her view, due diligence discussions should also include good governance while “thorough checks” need to be in place for European companies to make sure that there is no corruption or bribery down the line.
When it comes to the financial sector, due diligence should be framed in the context of anti-bribery and whitewashing, according to Wolters.
Yet, the financial sector has – at least for now – partially escaped the due diligence requirements following the political agreement on the new rules reached by member states on 1 December. The Council agreed to make the inclusion of financial services optional for member states, a move that pleased France in particular.
The optional inclusion of financial services in the scope of the corporate sustainability due diligence means banks will not be liable for activities harming the environment or human rights financed through their loans.
At the same time, following an agreement between EU lawmakers and ministers on 6 December, financial institutions will also be exempt from the import ban on deforestation-related products for at least two years after the entry into force of the new regulation.
The decision raised more than some eyebrows, as several reports have pointed to the role of banks in financing companies involved in deforestation.
“We should not be naive about the power of money,” Wolters said, commenting on the due diligence requirements for financial services, which will be a point of negotiation between the Parliament and the Council in the coming months.
“We have to make sure that the financial sector is included and that we zoom in and we make clear behavioural standards on the good governance aspects,” she said.
While it is yet to be seen whether Qatargate will influence the due diligence policy debate, the scandal has already disrupted some of the programmed work for MEPs. [...]