MEPs vote to make financial sector accountable for environmental harm and human rights violations
Posted on 24 January 2023
Today, MEPs from the European Parliament's Committee on Economic and Monetary Affairs opened the way for increased accountability from businesses
Many EU companies are causing or contributing to environmental damage through their own operations or global value chains, and the Corporate Sustainability Due Diligence Directive was created to address this issue. WWF welcomes MEPs' decision to include the financial sector and their support to making companies' directors responsible for putting in place and overseeing the sustainability due diligence process.
Sebastien Godinot, senior economist at WWF, said: “Today's vote represents a significant step towards the protection of both human rights and the environment. By including the financial sector in the Corporate Sustainability Due Diligence Directive, MEPs are finally putting the brakes on the longstanding lack of accountability in finance. We must never allow financial institutions to blindly throw money into a black hole without considering the devastating consequences it can have on people and our environment.”
Although progress has been made, the compromise has loopholes that could allow key financial institutions to evade their responsibility for the harm they contribute to with funding and investments. Foremost, institutional investors and asset managers cannot be held liable for adverse sustainability impacts, even if they know about the environmental or social harm they are supporting.
WWF calls on the European Parliament's Committee on Legal Affairs to fix the dangerous loopholes by including the full financial sector in the scope of the directive and ensuring it can be held liable for environmental or human rights damage that it finances.
With a strong Due Diligence Directive, we can make the EU greener, fairer, and more resilient!