After yesterday’s decision at COP28, the EU’s work to secure this goal is already being undermined by developments at home. The decision today by the European legislator to exclude financial services from the new Corporate Sustainability Due Diligence Directive (CSDDD) gives a blank cheque to European banks to continue financing investments in fossil fuels and human rights abuses in global supply chains.
Despite the omission of the financial sector from the framework, ActionAid welcomes the adoption of the Directive, which guarantees new rights for the most vulnerable throughout EU companies’ value chains. This comes after a long political battle where business lobbyists have deployed all efforts possible to drain the text of any effectiveness.
The deal managed to save provisions to strengthen access to justice for victims of corporate abuse, in particular on access to evidence, reasonable time limits to file claims, and the ability for NGOs and unions to represent victims. It also includes provisions to implement relevant stakeholder engagement at every step of the due diligence process. Both aspects are key to enhancing the rights to protection for vulnerable groups, especially women, who are disproportionately affected by adverse impacts of corporate activities.
Regrettably, climate obligations remain weak despite the need for EU companies, including financial services, to adopt climate transition plans, sketching out their emission reduction pathway in line with the 1.5-degree limit. This is the bare minimum, knowing that European banks have invested 325bn in fossil fuel in the Global South since the Paris Agreement.
Hamdi Benslama, ActionAid’s EU Advocacy adviser, said:
“The European legislator just gave a blank cheque to EU banks to continue making profits out of fossil fuel investments. This is a serious blow to the EU’s reputation and puts its sincerity in doubt, just 24 hours after its success in getting COP28 to agree to transition away from fossil fuels.”
Maelys Orellana, Corporate Accountability Campaigner at ActionAid France, said:
“Given the context where economic profits are used to prevail over the protection of human rights and the environment, the EU striking a deal on a directive to hold companies accountable for their impacts is a milestone. However, it contains many loopholes, and ensuring its efficiency will be a great challenge.”
ENDS
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About ActionAid
ActionAid is a global federation working with more than 41 million people living in 71 of the world’s poorest countries. We want to see a just, fair, and sustainable world in which everybody enjoys the right to a life of dignity and freedom from poverty and oppression. We work to achieve social justice and gender equality and to eradicate poverty.