Investors call for retention of financial review provision in the CSDDD, Brussels' legislative proposal

The European Commission is currently reviewing whether financial institutions should be legally required to assess their human rights and climate impact, as outlined in the Corporate Sustainability Due Diligence Directive (CSDDD). This review clause, a modest but vital step towards addressing the imbalance between short-term profit and long-term sustainability in the financial system, has sparked controversy.

A group of opposition, including organizations such as ShareAction, Oxfam, Americans for Financial Reform, the European Environmental Bureau, Global Witness, and Facing Finance, argues that scrapping the financial review clause would send the wrong message and lock in a special exemption for the finance sector that no other sector enjoys.

The financial review clause does not impose obligations on the financial sector, but it would allow lawmakers to better understand the impact of financing and investing decisions on the environment and human rights issues. Richard Gardiner, head of EU policy at ShareAction, reiterates that this clause is a crucial step towards ensuring accountability in the finance sector.

Luca Schiewe, a researcher at Facing Finance, and Beate Beller, a EU senior campaigner with Global Witness, both emphasise that scrapping the review would throw away the facts and potentially lead to a lack of transparency and accountability in the finance sector. Beller further reaffirms that finance should not be exempt from accountability for its impact on people and planet.

The EU's omnibus proposal, currently with the European parliament's committee for legal affairs, includes the removal of the financial review clause from the CSDDD. Under this proposal, the CSDDD would initially require companies to assess the impact of scope 1, 2, and 3 emissions and be held accountable for human rights and environmental breaches.

European Central Bank president Christine Lagarde has expressed concerns about the EU Commission's proposal to cut the EU sustainability rules, stating it could impede the central bank's efforts to incorporate climate change into its monetary policy framework.

The opposition group has submitted an open request to the European Commission and the European Parliament to retain the financial control clause in the CSDDD. The group argues that this clause is essential for ensuring the finance sector's accountability and transparency, and for promoting sustainable practices in the industry.

The page was last updated on September 8, 2025. The outcome of the vote on amendments to the law, planned for 13 October, will determine the future of the financial review clause in the CSDDD. This article does not contain any advertisements.