EU to vote on human rights, environment approach for financial firms

A panel of lawmakers of the European Union is set to vote this month on a deal regarding financial firms and their approach to human rights and the environment. The deal would require the financial companies to take action should their clients fail to uphold human rights and the environment.

This month, a group of EU lawmakers is set to vote on a preliminary deal that would require financial companies to take action should their clients fail to protect human rights and the environment. The deal, proposed by the European Commission in 2022, is known as the Corporate Sustainability Due Diligence Directive or CSDDD. The proposal has divided lawmakers and EU countries while also raising concerns in the United States over the extraterritorial nature of the measures.

EU countries last year in December reached a deal, deciding to give themselves the option of excluding financial services from the rules. However, the European parliament’s legal affairs committee is set to vote on the draft proposal on April 24 as its members have reached a potential cross-party compromise that includes financial services.

Both the EU countries and the EU parliament have the final say on the proposal, but the inclusion of financial services would be a point of contention among lawmakers and EU countries. Following the vote, lawmakers will meet with EU countries to draft a final version that would become law.

The compromise by the panel showed that banks and insurance firms would need to make due diligence checks on their clients but not terminate a loan or other services should the client become bankrupt. This provision would give asset managers some leeway, and they should “take appropriate measures” to “induce their investee” to end the adverse impacts on human rights or the environment.

Last week, United Nations investigators found evidence of crimes against humanity being committed against Libyans and migrants in Libya, such as women being forced into sexual slavery. The investigators also said the EU is implicated in sending support to Libyan forces that they said contributed to the crimes against humanity against Libyans and migrants.

Investigators cited the Libyan coast guard, which the bloc has sent support to over the years, which led to human rights violations.