Press Release: Leading EU Sustainable Finance Think Tank slams Council for jeopardizing EU Supply Chain Directive

November 16, 2023

Council proposal to risk the exclusion of financial institutions from the EU Corporate Sustainability Due Diligence Directive (CSDDD) could trigger an avalanche smothering EU ambition to prevent environmental destruction and human rights violations in EU supply chains before Christmas, says leading EU Sustainable Finance Think Tank Climate & Company.

Brussels, 16/11/2023: In the run-up to reaching an agreement before Christmas, the negotiations on the CSDDD, the often-called “EU supply chain law”, reached a turning point. Ahead of the next political Trilogue negotiations on 22 November, yesterday, EU ambassadors gave in to a proposal by the Spanish Presidency to exclude the financial sector from due diligence obligations under the CSDDD, with an eye on potentially including it at a later stage. The French government has been pushing hard in the Council to exclude the financial sector. Allegedly in an attempt to gain the graces of European financial titans in the race for becoming the EU’s next big finance hub after London.  “The Council is playing a dangerous political game by holding back on such climate and biodiversity critical inclusions. This is no time for political expediency.” says Ingmar Juergens, CEO of Climate & Company.  

The CSDDD is the one incentive for financial institutions to stop financing harmful activities hidden in their clients and investees’ value chains. This is where up to 80% of natural capital destruction and the majority of human rights violations take place. And it is the one opportunity to reduce the administrative burden for non-financial companies. This is because the CSDDD would create a harmonized set of due diligence requirements by their banks and investors across the EU. Removing even categories of financial institutions from the scope of the CSDDD – let alone the whole financial sector – risks derailing this opportunity. In addition, it could undermine the level of environmental and social ambition and the EU’s duty to create a level-playing field. A few Member States, such as Germany, have been pushing to exclude asset managers and institutional investors in particular from the scope of the CSDDD. 

Climate & Company CEO Ingmar Juergens stated: The CSDDD is the last opportunity to introduce concrete incentives for the financial sector to take charge of human rights violations and the destruction of our planet – and hence, the future of our children. EU capitals should not sabotage what has been a formidable effort by the EU Commission and the Parliament to acknowledge and tackle the tremendous footprint of the EU economy hidden in its supply chains.” 

“Asset managers and investors play a crucial role in the transition to sustainable supply chains. Their exclusion would undermine their role in the green transformation and in the shift of private capital towards sustainable business.  The Council must do what we know will not only benefit humankind but even shore up profits for the finance industry. Everyone comes out better-off!” added Juergens.