European Parliament incorporates financial sector in EU due diligence law with light touch rules
(Tuesday 25th April) Today, the European Parliament’s Legal Affairs Committee adopted its position on the EU’s corporate accountability legislation, urging businesses to care about people and the planet.
The Members of the Parliament acknowledged the role financial institutions have to play in protecting human rights and the environment by including them in the legal text, but ultimately opted for having lighter rules for financiers in place.
Commenting on the Committee’s decision to water down the due diligence rules for financial institutions, Isabella Ritter, EU Policy Officer at ShareAction, said:
“While we are content that the leading Legal Affairs Committee did manage to deliver such an important report in time and secured some crucial wins, in particular on directors’ duties, transition plans, and executives’ remuneration, we are very disappointed, however, to see that the rules for financial institutions were weakened on many accounts. The current proposal requires the financial sector to only carry out light touch due diligence, in clear contrast with international standards.
“Considering that the financial sector has a critical role in protecting the people and planet, it is important that financial institutions make full use of the tools that are available to them to take actions against environmental harm and human rights abuses. We need a regulatory framework that will achieve this, but the report voted today doesn’t go far enough. We urge the European Parliament to reconsider this in the next steps of the process.”