On 24 January 2023, each of the European Parliament’s trade committee and economic affairs committee reached agreed positions on the financial aspects of the draft Corporate Sustainability Due Diligence Directive (the “Draft Directive”). The agreed positions mark a departure from the European Commission’s and the Council of the European Union’s previous positions on the Draft Directive (which you can read about here and here), since the committees have agreed that:

  1. the scope of the Draft Directive should be widened to include the financial services sector and smaller companies; and
  2. the financial services sector should not be designated as “high risk”, meaning those within the sector would no longer be mandated to report on their sustainability engagement policies.

The European Parliament’s legal affairs committee will consider the trade committee’s and economic affairs committee’s agreed positions when reviewing the Draft Directive. Once the legal affairs committee has reviewed and opined on the Draft Directive, the EU Parliament will vote and determine its initial negotiation position on the Draft Directive (in accordance with usual EU legislative process).