European Parliament backs climate action for businesses, green due diligence for financial sector

Brussels, June 1 – The European Parliament today voted on its position on a new corporate accountability law, which will introduce rules to prevent large companies doing business in Europe from damaging the environment or threatening human rights. It also states they could be brought to justice in European courts if they fail to do so.

Parliamentarians backed new mandatory climate plans for large companies under the Corporate Sustainability Due Diligence Directive (CSDDD) which would oblige companies operating in the EU to reduce their greenhouse gas emissions in line with the Paris Agreement. Businesses, including many financial institutions such as banks and insurers, would be obliged to conduct due diligence on their human rights, environmental and climate impacts.

Companies would also have to regularly engage with the people affected by their projects, in an important win for the rights of workers and local communities.

Arianne Griffith, corporate accountability lead at Global Witness said: “Today’s vote in the European Parliament is a critical step in the right direction. Obliging companies to reduce their greenhouse gas emissions and making sure the financial sector stops investing in projects linked to climate breakdown and human rights abuses must be at the heart of the final law when it is negotiated later this year. Anything less could put human rights, the environment and our shared climate at risk.”

Negotiations to agree the final law are expected to follow, after the European Council agreed its position last December.