The Price of Influence: How Financial Lobbying Undermined the EU's CSDDD
The European Union’s Corporate Sustainability Due Diligence Directive (CSDDD) was hailed as a landmark piece of legislation, designed to hold companies accountable for human rights and environmental abuses throughout their global supply chains. However, a recent report by the financial watchdog Finanzwende suggests that a critical sector has largely escaped its teeth: the financial industry.
According to the report, “unprecedented” and intense lobbying efforts—spearheaded by major players like BlackRock and powerful banking groups—successfully carved out massive exemptions for asset managers, banks, and insurers from the directive’s core obligations.
This is more than a legislative loophole; it’s a stark example of how special interests can strategically weaken major sustainability efforts, leaving one of the most influential sectors of the global economy largely unaccountable for the risks tied to its core business.
The Carve-Out: Escaping Core Accountability
Initially, the CSDDD proposal intended to include the financial sector, forcing institutions to conduct due diligence on the companies they finance and invest in. This would have made banks and asset managers responsible for assessing human rights and environmental risks in their vast portfolios.
The core finding of the Finanzwende report is that “intense lobbying” succeeded in removing this obligation. The final legislative text shifts the responsibility for finance:
- Exempted Core Business: Financial firms are no longer required to conduct due diligence on the companies they invest in or finance.
- Limited Scope: Instead, they are only required to assess risks in their own direct operations and supply chains (e.g., their office suppliers or data centers)—a tiny fraction of their overall risk exposure.
This crucial distinction means that a major asset manager can still invest billions in a company tied to deforestation or forced labor without facing direct CSDDD liability for that investment decision.
BlackRock’s Role and Unprecedented Influence
The report specifically highlighted lobbying from groups like BlackRock and influential banking federations as instrumental in achieving this outcome. This success occurred despite divisions within the financial industry itself, where some players advocated for a more “nuanced” inclusion.
Finanzwende characterized this outcome as a “disgraceful example” of special interest groups securing significant legislative carve-outs, despite objections from many policymakers. While the Business & Human Rights Resource Centre reached out to BlackRock for comment on these allegations, the company provided no response.
The Next Battle: Making the Exemption Permanent
The report warns that the fight isn’t over. Plans within the European Commission’s “Omnibus package” allegedly aim to make this financial sector exemption permanent by removing the CSDDD’s original two-year review clause.
If passed, this move would cement the financial sector’s ability to remain “largely unaccountable for the environmental and human rights risks associated with its core business,” shielding it from mandatory scrutiny long-term.
Implications for Global Due Diligence
For businesses outside the finance bubble, this lobbying success serves as both a warning and a template. It confirms that regulatory efforts—even those with broad political support—are always susceptible to intense pressure from influential economic actors.
The CSDDD was meant to create a level playing field for human rights and environmental accountability across all major industries. If the financial engine driving the global economy remains exempt from assessing the risks it bankrolls, the directive’s potential to truly curb global abuses is fundamentally compromised. The pressure is now on civil society and remaining policymakers to push back and reinstate accountability for the institutions that ultimately fund global supply chains.