ESBG calls for more feasible rules on the new corporate sustainability due diligence
In its response to the European Commission (EC)’s call for feedback on the proposal for a Directive on Corporate Sustainability Due Diligence, the ESBG suggests several changes to make the rules more feasible.
ESBG members support the goal to tackle environmental issues and human rights abuses as they commit to sustainable, responsible and future-oriented banking and support the creation of a coherent legal framework. Nevertheless, ESBG finds that the proposal foresees a role for financial entities that is too ambitious and could create legal uncertainty.
To avoid unfeasible implementation and monitoring costs, accompanied by uncertain legal consequences, we request further clarification on the role of financial entities in the context of the proposed Directive.Rules must be proportionate, feasible and should not restrict competition and innovation. The current environment might not be adequate for requirements that could hamper economic and financial recovery.
The ESBG feedback calls to limit the scope to companies with less than 1000 employees, and for a voluntary common due diligence framework of best practices for regulated financial undertakings that takes into account a specific connection to the provision of services by banks. It also calls for the introduction of a grandfathering provision for the identification of actual and potential adverse impacts and the creation of a uniform standard for the preparation of a Code of Conduct.
ESBG members underline that there is no need to establish new corporate directors’ duties and that existing liability regimes already provide appropriate rules. In consideration of the right to the presumption of innocence, businesses should not be held for damage in their supply chain if they did not directly cause it.
Additionally, several terms need to be further clarified and disproportionate provisions should be eliminated.
related
Corporate Social Responsibility
Socially responsible banking is part of WSBI and ESBG members' DNA. A strong commitment to sustainable development, members place corporate social responsibility (CSR) as an integral part of their business. They hold values outlined by the Three "Rs": retail, regional, responsible.
A sustainable banking model: crucial to financing the real economy
A sustainable banking model provided by embedded CSR and sustainable development practices is crucial to financing the real economy, leading the way to a competitive social market economy. Against this backdrop, WSBI-ESBG advocates continuing with its engagement in all relevant CSR initiatives at European level and international level, so as to contribute to the 2030 Sustainable Development Agenda and the 17 Sustainable Development Goals, approved by the UN General Assembly in 2015. The development of CSR should be led by enterprises themselves, as they are best placed to design a sustainable strategy according to their business model, their needs, their positive impacts, and the expectations of their partners. Collaboration with other stakeholders in these endeavours remains key. In addition, WSBI-ESBG believes that a level playing field in the adoption of responsible practices is key, making it the responsibility of all entities and not only of the business community. In addition to this respect, prescriptive regulatory frameworks should be avoided when fostering CSR, as this would hamper social innovation, a driver of CSR and sustainable development.
There is a need to consider the longer term where environmental, social and governance initiatives can fulfil their maximum potential. Long-termism is necessary to create a sound basis for sustainable growth (EU growth agenda), and should be envisaged in reporting, investments, risk assessment etc. In this respect, governments should include ESG factors in their own policies: government investment, public policies, etc. There is a growing understanding of the benefits that reporting on non-financial issues can have. However, reporting should remain flexible and the choice of each business according to its needs and strategy.
WSBI-ESBG members play an important role in territorial cohesion as well as being important actors in the preservation of the diversity of the financial system. Therefore a reinforced role, benefitting from the application of the principle of proportionality, is the way forward to be able to contribute to accomplish the objectives of the Europe 2020 Strategy: smart, inclusive and sustainable growth, and the 2030 Global Sustainable Development agenda, and the 17 UN SDGs.
ESBG position
WSBI-ESBG has a firm commitment to continue to work towards creating welfare, raising awareness, identifying trends and creating opportunities for dialogue, engaging with other stakeholders and bringing forward its members’ responsible business model. WSBI-ESBG strives to participate in all relevant EU and international initiatives and fora, adding its value and longstanding experience in the field.
Background
WSBI-ESBG members have an embedded social commitment to the communities and regions in which they operate. This is an integral part of their identity and one of their distinctive features. WSBI-ESBG members contribute to the improvement of living conditions, supported local economic development and build greater social cohesion in their local communities. In most countries today, this commitment to society is one of the pillars of a broader and comprehensive CSR approach, which is reflected in banking activities and professional practices. Thus WSBI-ESBG members’ involvement stretches from financial inclusion and financial education projects to environmental action, preservation of cultural heritage, fair and clear relations with customers, engagement with stakeholders, etc. WSBI-ESBG members embody a “stakeholder” model, seeking to bring value and return to the whole community of stakeholders which surrounds them, including investors, suppliers, customers, employees and the local community in which they operate. Moreover, WSBI-ESBG members’ commitment to social responsibility is greatly supported by a substantial contribution to philanthropic activities which amounted to around €1.7 billion, according to the latest yearly data of the institute. Through a series of philanthropic investments, WSBI-ESBG members are driven by the conviction that alongside their banking and financial activities and traditional intermediation role, they also have a social responsibility.
WSBI-ESBG is actively involved in the debate on CSR and sustainable development practices at European and international levels. By way of example, WSBI-ESBG has recently become a Supporting Institution of the United Nations Environmental Programme for Finance Institutions. In addition, WSBI-ESBG pays a lot of attention to all European Commission developments that manage to mainstream responsible practice in businesses, including its financing growth and sustainable finance strategy, or its work to implement the SDGs at Union level. Sustainable Development Goals. In these areas, WSBI-ESBG contributes its expertise to the work of policymakers and standard setters. >>View WSBI-ESBG and members’ contribution to the SDGs.
