Financial institutions & companies voice support for finance sector inclusion in EU due diligence law
This compilation is part of our Mandatory Due Diligence portal, where we have collected more examples of business support for mandatory human rights and environmental due diligence. You can find further evidence of support for the inclusion of financial activities in the CSDDD among financial corporations, real economy companies, civil society organisations, academics, faith leaders and other stakeholders here.
... For private finance to be able to effectively support the green transition of the real economy, it is crucial that regulatory and legislative changes are consistent across sectors. In other words, in the absence of clear reasons to the contrary, which I fail to see, financial undertakings should not be treated differently from other companies, including in the context of the Corporate Sustainability Due Diligence Directive (CSDDD) that is currently being discussed by co-legislators. At the ECB, we consider that this can help to ensure that financial institutions – including banks – systematically integrate sustainability matters into their decision making and risk management practices. Not excluding the financial sector from the remit of the CSDDD can further help to create greater certainty around financial institutions’ obligations in this area and around climate- and environment-related litigation risks for the financial sector...
Frank Elderson, Member of the Executive Board of the European Central Bank & Vice-Chair of its Supervisory Board, 14 November 2023
...Significant progress has been made in Council and Parliament negotiations. However, we are aware of proposals to exclude or significantly limit the due diligence requirements for investors. This undermines the opportunity for a harmonised approach, could lead to sustainability risks and impacts being unidentified and could cause legal uncertainty for the financial market...
UN Principles for Responsible Investment (PRI), 17 October 2023
...Require robust, ongoing due diligence from financial and non-financial companies, throughout the value chain
Carrying out effective due diligence, in line with international standards, helps investors to better manage financial risks, more effectively and proactively manage ESG impacts, and align their activities with the evolving demands of beneficiaries and clients. Some investor due diligence-related requirements already exist in EU legislation... However, none of these pieces of legislation mandate comprehensive investor due diligence, in line with the UNGPs and OECD Guidelines.
The CSDD proposal offers an opportunity to complement the existing EU legislation by filling in the gaps. To that end, investors call on the EU co-legislators to amend the due diligence obligations for financial undertakings to include ongoing assessments which cover the entire value chain, accompanied by guidance clarifying how different financial undertakings should interpret their responsibilities. This requires amending the EU Commission’s proposal which currently limits financial undertakings’ due diligence obligations to a pre-service assessment, and furthermore considers only the activities of the clients receiving the investment provided those clients are not SMEs. Responsible investors are committed to carrying out ongoing due diligence, throughout the value chain, and this should be reflected in the CSDD. This will create a level-playing field and enable investors to better manage the ESG risks and impacts of their investments...
PRI, Eurosif, the Investor Alliance for Human Rights & 142 investors representing ~1.5 trillion USD in AUM, 22 November 2022
...As the representative associations of the Dutch insurance, pensions and banking sector, we are reaching out to call upon you to include financial institutions in scope of the Corporate Sustainability Due Diligence Directive (CS3D). We believe that businesses – including financial institutions – can play a key role in reducing human rights violations and tackling environmental problems...
Dutch insurance, pensions & banking sector associations, 30 October 2023
BHRRC
...The due diligence requirements should be risk-based and apply to the entire spectrum of risks and impacts across the full value chains of companies in all sectors, including financial institutions, in line with the international standards.
The same concepts in those standards that make due diligence feasible in an upstream context – including prioritisation on the basis of severity and the need to look at how a company’s own activities can heighten or reduce risks across value chains – also make it feasible in a downstream context... There is no need to make exceptions if we truly want a level playing field and to ensure downstream risks are effectively managed. This also applies to the inclusion of financial products and services...
40+ companies, investors & networks, including ALDI SÜD, Unilever, IKEA, Aviva Investors, Hapag-Lloyd, GLS Bank, Crédit Mutuel Asset Management & La Banque Postale Asset Management, 30 August 2023
...Carving out the financial sector or parts of the financial sector such as institutional investors from the scope of the Directive, as proposed by some negotiating parties, would run counter to the international consensus that all businesses – financial and non-financial – have responsibilities to avoid and address adverse impacts on human rights and the environment. It might also inadvertently undermine existing and future implementation of due diligence in the sector by sending the message that environmental and social due diligence is simply not expected of financial institutions or expected only of some. Institutional investors, for example, are key to driving sustainability in the wider economy...
...The existing regulations require financial institutions to disclose information on their sustainability due diligence rather than to implement such due diligence processes. By creating an obligation of conduct to undertake sustainability due diligence, the CSDDD can complement these regulations and supports financial institutions to build robust internal systems and procedures, which are foundational to meaningful disclosures. The due diligence requirement must follow a risk-based approach, cover the full value chain, and be tailored to the specificities of financial institutions and activities. Above all, the due diligence requirements must align with the UNGPs and the OECD Guidelines.
Financial institutions are uniquely placed to drive positive sustainability outcomes in the real economy and therefore contribute to the effectiveness of the CSDDD... The Directive should harness the force of finance and help those of us already committed to scale the impact of our efforts...
P+ Pension for Academics, AkademikerPension, AP Pension & Storebrand Asset Management, 6 November 2023
...Establish provisions for ongoing, risk-based due diligence throughout the value chain. We support requirements for investors to undertake ongoing, risk-based sustainability due diligence across the value chain, based on the provisions set out in Article 8(a) of the Parliament text. Conducting sustainability due diligence, both pre- and post-investment, enables investors to better identify and manage their own exposures to sustainability-related risks. This in turn supports capital allocation decisions and engagement with investees, creating a ‘virtuous cycle’ where companies are more likely to address adverse impacts they cause or are linked to as a result of investor pressure...
Institutional Investors Group on Climate Change Ltd., 26 October 2023