European Parliament acknowledges financial sector’s key role in advancing human rights and environmental protection in landmark vote
(Thursday 1st June) Today, the European Parliament adopted its final position on the first EU-wide corporate accountability legislation, mandating environmental and human rights due diligence obligations for financial and non-financial companies.
Commenting on the Parliament’s decision to include rules for the financial sector in the Corporate Sustainability Due Diligence Directive (CSDDD), Isabella Ritter, EU Policy Officer at ShareAction, said:
"The recognition by the European Parliament that the financial sector has a critical role to play in protecting human rights and the future of our planet is a real gamechanger. We are particularly pleased to see that the rules on investor due diligence have made it into the Parliament’s final text. Today, the European Parliament has sent a powerful strong message that the financial sector has its place in the Corporate Sustainability Due Diligence Directive.”
In addition, the European lawmakers have introduced significant improvements to the requirements for transition plans. The MEPs have made it clear that all companies in scope of the Directive, financial and non-financial, have to adopt a transition plan, to make sure that they are taking their climate commitments seriously. Large companies will also have to link directors’ variable remuneration to the adoption of such a plan.
“On a more negative note, we regret to see that the European Parliament dropped the rules on the directors’ obligations to oversee the due diligence process. Having directors’ oversight is an important part of responsible business conduct according to international guidelines and enables companies to be more resilient and efficient,” Isabella Ritter said.
“We eagerly look towards the next steps in the process and the start of the inter-institutional negotiations with the Council and the European Commission. We urge the co-legislators to uphold the level of ambition agreed in today’s vote. We need an effective legislation to come out of the negotiations to ensure the EU's first corporate accountability legislation can live up to its potential.”
Now that the European Parliament has formed its final position, the inter-institutional negotiations, the trilogues, will kick off soon. The discussions are expected to start in the coming weeks and potentially be finalised by the end of the year.