Provisional agreement on the Corporate Sustainability Due Diligence Directive

On 13 December 2023, a provisional agreement was reached between European Union co-legislators on the Corporate Sustainability Due Diligence Directive (CSDDD). The CSDDD aims to enhance the protection of the environment and human rights in the EU and globally.

While there has been provisional agreement, the text as agreed by the Council and Parliament has not yet been published and there is still no confirmed definition of financial services under the CSDDD. However, early indication from the European Parliament’s press release (available here), and from a joint European Union institution press-conference (available here) both released on 14 December 2023, indicates that while there are some exemptions for the financial services sector (including insurers), in-scope insurers will need to comply with certain provisions, including the requirement to report their upstream obligations and adopt and implement climate transition.

As the CSDDD moves towards implementation, it is important that insurers remain cognisant of their potential obligations under the CSDDD. A more detailed analysis of the impact on insurers (and the wider financial services sector) will be prepared once the text of the CSDDD is published (which is expected to be in early 2024).

Resources:

• Corporate due diligence rules agreed to safeguard human rights and environment
• Press conference by Lara Wolters, Commissioner Didier Reynders and Spain’s State Secretary Gonzalo García Andrés on deal on due diligence rules for companies

For further information, please contact Sinéad Lynch, Partner, Adam Assahli, Associate, or any member of the Insurance & Reinsurance team at ALG.

Date published: 22 December 2023