Finance lobbied harder than any other sector to water down CS3D, finds research

The finance sector has lobbied harder than any other to weaken the EU’s Corporate Sustainability Due Diligence Directive (CS3D), according to analysis released today.

A new initiative called Social LobbyMap has found that nearly half of the 32 financial players it assessed had adopted “negative positions” on the law, which has been drastically watered down since it was first conceived in 2022.

CS3D seeks to introduce due diligence requirements for European companies, to hold them accountable for environmental and human rights abuses happening in their own businesses and in their supply chains.

It was slated to come into force in 2027, but is being renegotiated as part of Europe’s current simplification drive.

IPE wrote earlier this month that the Principle for Responsible Investment (PRI) was awaiting inaugural analysis from Social LobbyMap about how 88 firms had communicated with policymakers on CS3D, to inform shareholder engagement efforts on responsible human rights lobbying.

But, according to the report, investors may have to prioritise engagement with their own sector.

“Out of the 32 finance entities covered, only eight entities expressed overall supportive positions [to CS3D] while 17 entities adopted not-supportive or opposing views,” said Social LobbyMap, which is run by the Eiris Foundation.

Based on their consultation responses and public statements, Aviva and the Association Les Acteurs de la Finance Responsible were identified as top supporters of the Directive, while the research claimed “opposition was led by Nasdaq, Borsa Italiana, Investor AB and the Fédération Bancaire Française”.

The only group with a higher proportion of adversaries than finance was cross-sectoral trade associations, of which 19 out of 24 advocated to weaken the directive.

CS3D was hailed as one of the most transformative pieces of the EU’s sustainable finance agenda when it was proposed, because it was the first to explicitly target behavioural change, whereas laws like the Sustainable Finance Disclosure Regulation, the Corporate Sustainability Reporting Directive, and the green taxonomy are all transparency measures.

However, it was subject to unprecedented last-minute negotiations in 2024, driven partly by opposition from the French finance sector.

The directive’s scope was cut and the finance sector was removed from the law, with a promise to revisit its inclusion in coming years.

The file is being renegotiated as part of the EU’s simplification omnibus – European Council announced its negotiating position yesterday – and there are calls for finance to be permanently removed from scope.

The Eiris Foundation said it was important to understand the track records of companies and their investors on CS3D lobbying, because they could inform the outcome of the current political discussions.

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