IIGCC responds to CSDDD deal

Leo Donnachie, IIGCC’s Senior Policy Manager (Sustainable Finance), responding to the Corporate Sustainability Due Diligence Directive deal:

“This morning EU institutions struck a milestone deal on the Corporate Sustainability Due Diligence Directive (CSDDD). This legislation builds on the foundations of the EU’s sustainable finance framework, complementing their focus to date on disclosure and transparency, with new requirements for companies to take more ambitious action on sustainability issues. 

“We have been advocating for an ambitious but workable outcome on CSDDD for nearly two years and are pleased to see some of our key asks reflected in the provisional deal. We particularly welcome the robust provisions for companies (including financial institutions) to adopt and put into effect transition plans that align with a 1.5C world, including emission reduction targets. This should help to close the ‘comply or explain’ loopholes in EU transition plans and help to make sure companies take action at the pace and scale needed to reach net zero. 

“However, not everything we hoped for was reflected in the final compromise text.  

“We have consistently highlighted the role the financial sector has to play in the context of sustainability due diligence, but for now it looks like financial institutions will only be required to carry this out for their ‘upstream’ value chain (e.g. suppliers). However, the EU institutions have agreed to a review clause on this issue, and we will continue to advocate for an outcome that accounts for the nuances of how investors carry out due diligence in practice. 

“Overall, our engagement with the EU to date has supported the creation of sustainable finance regulation that is ambitious on climate, while being workable in practice for investors. The CSDDD may not be perfect, but it is a welcome step forward that should help to drive meaningful behavioural change on sustainability issues and uphold the goals of the European Green Deal. We look forward to seeing it endorsed and formally adopted by the European Council and Parliament next year.” 

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