UN PRI calls for financial sector inclusion in EU due diligence directive based on 'clear, achievable & proportionate' obligations
...Due diligence is an important and necessary part of a responsible investor’s toolkit, supporting sustainability assessments, risk analysis and investee-engagement. Many PRI signatories already implement the UNGPs and OECD Guidelines and support mandatory due diligence legislation. Therefore, PRI welcomes the proposed CSDDD. It offers the opportunity to correct the piecemeal approach to due diligence within existing financial legislation, harmonise expectations and requirements, and level the playing field across the EU, to avoid duplicative or inconsistent rules.
Significant progress has been made in Council and Parliament negotiations. However, we are aware of proposals to exclude or significantly limit the due diligence requirements for investors. This undermines the opportunity for a harmonised approach, could lead to sustainability risks and impacts being unidentified and could cause legal uncertainty for the financial market.
We encourage policymakers to support a risk-based approach, aligned with international standards and grounded in the concepts of severity and leverage to ensure clear, achievable and proportionate due diligence obligations for the financial sector. This should look at the full value chain both pre-investment and throughout the investment’s life. Such an approach will lead to better financial risk management, support investors to align their activities with the evolving demands of beneficiaries and clients and help drive private finance towards the sustainable economic transition...
[Full letter available for download above]
This letter was sent to representatives of the Governments of France, Germany, Luxembourg and Italy as well as DG JUST and DG FISMA in the European Commission ahead of a Council Working Party meeting on the topic.