More than 30 investor and human rights organisations have urged EU policymakers to keep financial institutions in scope for potential future compliance under the Corporate Sustainability Due Diligence Directive (CSDDD).
In a joint letter sent on 1 September, groups including ShareAction, WWF, Oxfam and Reclaim Finance pressed the European Commission and European Parliament to preserve the directive’s “review clause” in the final legislation. The clause requires the Commission to report by July 2026 on whether additional due diligence rules should be extended to banks and other regulated financial institutions.
The organisations described the clause as “modest in scope but highly significant in purpose,” arguing that it would enable policymakers to assess how investment and lending decisions contribute to fossil fuel expansion, deforestation and human rights abuses in supply chains.
The clause is at risk of removal under an Omnibus package adopted by the Commission in February, which critics say weakens the directive’s reach. The European Parliament’s Committee for Legal Affairs is expected to vote on amendments on 13 October, with a full parliamentary vote likely later in the month.
The financial sector was originally included in the CSDDD proposal in 2022, which would have required banks and investors to consider the downstream activities of their clients. However, following negotiations with Parliament and Council in December 2023, financial services were excluded, leaving only the review clause as a pathway for later inclusion.
Campaigners warn that eliminating the clause would amount to letting finance “off the hook.” “Without it, high-risk investments can continue to fuel human rights abuses and environmental destruction without consequences,” the joint letter stated.
The European Central Bank has also backed retaining the clause, stressing in May that financial institutions should not be treated differently from other sectors. “For private finance to effectively manage risks and support the green transition of the real economy, it is crucial that regulatory and legislative requirements are consistent across sectors,” the ECB said.
