Report: Meaningful inclusion of EU financial institutions in CSDDD vital to minimising human rights & environmental impacts
"Report: Financial institutions in the EU are driving harm to the environment and human rights", 31 Oct 2023
Supported by 13 organisations from across the EU, the report’s findings underscore that while the financial institutions in the EU have nearly four times more financial assets than non-financial companies, many policymakers are pushing hard to exclude due diligence requirements for financial activities in the negotiations on the upcoming law. [...]
This briefing aims to showcase environmental and social harm that the EU financial institutions have been involved in, but which could have been mitigated or avoided with a robust sustainability due diligence law that requires financial institutions to safeguard both their own interests and the wellbeing of the planet. More specifically, using secondary data, the report highlights three cases that exemplify the adverse impacts that the EU regulatory framework has so far allowed financial institutions to support: (1) Paraguay’s deforestation crisis; (2) environmental pollution and public health crisis in Colombia; (3) harming coastal ecosystems and communities in the Philippines.
Each case details what the harm is about, how the EU’s financial institutions have contributed to it, and how an effective Corporate Sustainability Due Diligence Directive could and should promote more responsible financial decisions.
All cases reflect three minimum requirements that the Directive should impose on financial institutions, to ensure more informed and responsible financial decisions and practices:
- identify, prevent and mitigate potential and actual human rights violations and environmental harm in all financial activities, including lending, insurance and investing;
- make sure such due diligence is undertaken both before providing financial services and activities, and at regular intervals during the financing period;
- use their leverage over irresponsible companies to induce improvement in corporate practices. [...]
WWF calls on the EU co-legislators for the full and meaningful inclusion of the financial sector in the Corporate Sustainability Due Diligence Directive during the next phase of the trilogue negotiations.
Note: The reports the case studies are based on sought responses from the companies involved.