The Spanish Presidency of the EU Council is leaning towards the exclusion of the financial sector from the EU corporate accountability rules, which are currently under inter-institutional negotiations, according to an internal document seen by Euractiv.
In the document, prepared ahead of a meeting of member state attachés on Friday (10 November), Spain – which is currently at the helm of the rotating EU Council Presidency – proposes to exclude finance from the EU corporate sustainability due diligence directive (CSDDD), a law set to make large companies accountable for human rights and environmental violations along their value chains.
The exclusion of the sector is proposed due to the internal divisions among member states on the issue which, according to the text, could put the overall agreement on the law at risk.
In their general approach adopted last December, member states agreed to leave the inclusion of the sector as a national option, a move spearheaded by France, which continues to strongly support a carve-out of finance from mandatory due diligence requirements.
The latest Presidency text goes against a previous text which proposed to member states various options to cover the sector under the directive, in an effort to find common ground with the European Parliament. The Parliament had voted in favour of the inclusion of finance in June.
In order to find a compromise solution with the Parliament, the document proposes to include a review clause to cover financial institutions at a later stage, accompanied by a political declaration of the three EU institutions to show strong political commitment.
Moreover, to compensate for the carve-out, the Presidency proposes concessions on other elements where the Parliament was more ambitious than member states.
These would include access to justice for victims of corporate abuses, remuneration linked to transition plans and the inclusion of new sectors in the scope of the directive.
Tough negotiations ahead
The possible exclusion of the financial sector is expected to raise criticism from both civil society organisations, which have long called to make financial institutions accountable for the impact of their investments on human rights and the environment, as well as members of the European Parliament.
According to the document, if the Parliament’s negotiators do not agree on the exclusion of the sector, discussions should again look at compromise solutions.
After the meeting on Friday, member states’ ambassadors are expected to meet next week, while the next round of inter-institutional negotiations is set to take place on 22 November in Strasbourg.
[Edited by János Allenbach-Ammann/Nathalie Weatherald]
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