'Preserve the Financial Sector Assessment Clause in CSDDD: A Necessary Step for Responsible Investment and EU Credibility'

Dear Members of the European Parliament,

As you negotiate your position for the Corporate Sustainability Due Diligence Directive (CSDDD), we ask you to protect... the obligation for the European Commission to review whether financial institutions should be legally required to assess and mitigate their impacts on people and the planet.

This clause is modest in scope but highly significant in purpose. It does not immediately impose obligations on the financial sector but merely asks for a review based on analysis and research. This should be the cornerstone of any legislative assessment. Removing this clause would send the wrong signal: that the EU is willing to let the financial sector off the hook; that high-risk investments can continue to fuel human rights abuses and environmental destruction without consequences; and that systemic risks for investors themselves may grow unchecked. In an era of unprecedented environmental degradation and growing social inequality, this is not tenable. In particular, with the recent ruling from the International Court of Justice stating that EU member states must explore all avenues to address the climate crisis and comply with the Paris Agreement...

The credibility of the entire SIU [Savings and Investment Union] initiative depends on ensuring that the financial sector does not operate in a vacuum, shielded from the sustainability obligations placed on the companies they invest in. By using the CSDDD as a tool for risk management rather than additional paperwork... the Commission can reassure long-term asset owners that sustainability risks will be effectively managed as they allocate capital to innovation and transition.

Retaining this review clause is not only common sense but good governance. A robust, evidence-based review will give the European Commission, Parliament, and Member States the opportunity to determine the appropriate approach based on evolving data, practices, and policy coherence with other EU legislation such as SFDR, CSRD, and the Green Deal. Moreover, there has been broad public support from banking supervisors and investor groups to maintain inclusion of this review clause in the final agreement...

We, the undersigned, urge you to stand by this review clause and preserve the EU’s leadership in responsible business conduct. Sustainable finance must not be a slogan. It must be built on accountability and transparency at every level of the investment chain.