New legislation will impose environmental and human rights due diligence obligations on both financial and non-financial companies.
The European Parliament has adopted its final position on the Corporate Sustainability Due Diligence Directive (CSDDD), marking a significant step towards establishing the first EU-wide corporate accountability legislation.
The legislation aims to impose environmental and human rights due diligence obligations on both financial and non-financial companies.
A key aspect is the inclusion of rules for the financial sector in the CSDDD, according to responsible investment NGO ShareAction.
Isabella Ritter, EU Policy Officer at ShareAction, praised the move, stating:
“The recognition by the European Parliament that the financial sector has a critical role to play in protecting human rights and the future of our planet is a real gamechanger. We are particularly pleased to see that the rules on investor due diligence have made it into the Parliament’s final text.”
Additionally, European lawmakers mandated that all companies falling under the scope of the CSDDD, whether financial or non-financial, must adopt a transition plan to demonstrate their commitment to addressing climate concerns.
Further, larger companies will be required to link directors’ variable remuneration to the adoption and implementation of such plans.
Trilogue discussions with the Council and the European Commission are expected to commence in the coming weeks, with a potential resolution by the end of the year.
ShareAction’s Ritter urged the co-legislators to maintain the level of ambition agreed upon in the recent vote.
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