In parallel to its Regulation on deforestation-free products (see here), the EU is currently preparing a Directive on mandatory human rights and environmental obligations for business more generally. This legislation is intended to create a level-playing field among companies operating in the EU market and ensure that these adequately take into account human rights and environmental risks, including deforestation. The respective due diligence obligations are to apply throughout companies’ entire value chains and with regards to all products and services. A first proposal for the so-called Directive on Corporate Sustainability Due Diligence (CSDD) was published on 23 February 2022.
In our new policy brief, we analyse along with Climate & Company and Rechtsanwälte Günther why sustainability due diligence obligations for financial institutions are key to achieving the EU's climate goals. As an example for this tool, we draw on due diligence obligations for financial institutions to avoid financing projects that cause deforestation. In addition, the policy brief presents specific recommendations for regulating financial actors through the EU Corporate Sustainability Due Diligence Directive (CSDDD).