Due Diligence Directive: will financial institutions be held accountable?

Reclaim Finance critiques the current proposal of the Corporate Sustainability Due Diligence Directive (CSDDD), arguing that it contains loopholes that could exempt financial institutions from accountability. The author specifically highlights the need for a broader definition of 'value chain' to include all financial services and more rigorous, science-based requirements for climate transition plans under Article 15.

• The current CSDDD proposal limits the due diligence scope for financial institutions to clients they provide "direct" support to, which may exclude subsidiaries of companies unless the financial institution explicitly benefits from that subsidiary.
• A general agreement in the EU Council from December 2022 allows EU Member States to either partially include or fully exclude financial institutions from the directive, potentially allowing banks to finance fossil fuel extraction without accountability for greenhouse gas emissions or local environmental impacts.
• While Article 15 of the CSDDD requires companies and financial institutions to adopt climate transition plans including scope 1, 2, and 3 emission targets, the text is weakened by the use of phrases like "where relevant" and "where appropriate," and the removal of the term "science-based targets" in favor of "targets."

APA

Martin, L. (2023). Due Diligence Directive: will financial institutions be held accountable? Reclaim Finance. https://reclaimfinance.org/site/en/2023/05/30/due-diligence-directive-will-financial-institutions-be-held-accountable-2/

Chicago

Martin, Léo. Due Diligence Directive: will financial institutions be held accountable? Reclaim Finance, 2023. https://reclaimfinance.org/site/en/2023/05/30/due-diligence-directive-will-financial-institutions-be-held-accountable-2/.

Wikipedia

{{cite press release |last1=Martin |first1=Léo |title=Due Diligence Directive: will financial institutions be held accountable? |publisher=Reclaim Finance |date=30 May 2023 |url=https://reclaimfinance.org/site/en/2023/05/30/due-diligence-directive-will-financial-institutions-be-held-accountable-2/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{martin2023due, author = {Martin, Léo}, title = {{Due Diligence Directive: will financial institutions be held accountable?}}, publisher = {Reclaim Finance}, year = {2023}, month = may, url = {https://reclaimfinance.org/site/en/2023/05/30/due-diligence-directive-will-financial-institutions-be-held-accountable-2/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }