The (CSDDD) … was a great success for supply chain rules in the EU. However, with regard to financial sector responsibility, it was substantially watered down. While some lobby groups attacked the entire CSDDD unsuccessfully, a small number of finance lobbyists secured a quasi carve-out for the entire financial sector…

The inclusion of the financial sector in the supply chain rules was supported by the European Commission, the European Parliament and even many of Europe’s large financial sector lobby groups, like the European Banking Federation…

The carve-out for the financial sector mostly came about in the member states’ negotiations in the European Council in November 2022. Allegedly answering calls from its national banking groups and from actors like BlackRock, the French government secured large-scale exemptions for the financial sector in the CSDDD. First, an exemption for asset managers was written into the Council compromise text. The exemption became known as the “BlackRock exemption”…

Later, this exemption was broadened to cover banks and insurance companies as well. As a result of this carve-out, banks, insurance companies and asset managers are required to perform due diligence on the supply chain of their office materials (“upstream”) but can ignore the environmental and human rights impacts of their multi-billion-euro investments in mining projects or textile industries (“downstream”)…