UNI calls for finance to be included in European due diligence directive, and warns legislators not to be swayed by ugly industry lobbying

Nyon and Brussels – UNI Global Union and UNI Europa, which together represent 3 million finance workers worldwide, half of whom are in Europe, have written to the EU’s top legislators calling for the full and effective inclusion of the financial sector in the forthcoming European Corporate Sustainability Due Diligence Directive (CSDDD).

In a letter sent on 19 October, UNI General Secretary, Christy Hoffman, and UNI Europa Regional Secretary, Oliver Roethig, state that “The directive has the potential for a game-changing impact both within Europe and globally by requiring European companies to respect workers’ rights in their operations and value chains worldwide.”

 However, excluding the finance industry in the directive – as the EU Commission and several Member States, including France, are pushing for – “would weaken the directive’s goals of advancing human rights and environmental justice, fail to meet international standards, and ultimately hinder the standing of finance itself.”

They warn that “ugly industry lobbying claiming that human rights do not apply to finance,” will if successful, “leave a stain on the industry still desperately needing to rebuild trust and demonstrate how it is serving society.”

In the letter, the union leaders hit back at the lobbyists’ claims point-by-point and provides a robust endorsement for the inclusion of finance in the directive, which will require the sector’s companies operating in Europe to identify, mitigate and act upon human rights and environmental abuses in their supply chains. The letter argues that:

• International standards, such as the UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises, already foresee and address the needs for effective but manageable human rights due diligence in finance. While financial firms argue their reach across the economy makes conducting human rights due diligence an unreasonable obligation, these standards narrow responsibilities to the areas prioritized as the greatest risks. Under this principle, there is no need for the directive’s scope to be limited through the blanket exemption of the finance industry.
• Finance industry lobbyists argue their investment relationships differ to those between a company and supplier and therefore the sector should be excluded from the directive. However, the OECD has clearly and comprehensively acknowledged this distinction and requires investors to use their leverage “to influence those investee companies to prevent or mitigate adverse impacts. However, investors are not responsible for addressing those adverse impacts themselves.” Furthermore, the OECD recognizes the different types of investment relationships and does not presume they are all “directly linked” with the investor.
• The finance industry claims they are already over-regulated, and their inclusion would add a burden without adding value. However, there is currently no EU regulation requiring financial institutions to conduct human rights due diligence, undermining the EU’s work on due diligence across the board.
• Effective human rights due diligence will not make the finance industry less competitive – as lobbyists claim – but instead serve as a means for identifying material risks that could weaken financial performance.

In addition, UNI and UNI Europa reiterate that the directive must strongly and directly mandate the meaningful involvement of trade unions and other stakeholders throughout the due diligence process.

They call upon EU governments to align the directive to the June 2023 position of the European Parliament, which will both realize the aims of the directive and be feasible to implement.

The letter has been sent to members of the European parliament and the European Commission.

Further reading: The role of finance in the EU’s Corporate Sustainability Due Diligence Directive

ENDS

UNI Europa, the European Services Workers Union, which is the social partner for the finance industry in Europe, is part of UNI Global Union, which represents 20 million service workers worldwide in 150 countries.

www.uniglobalunion.org