The Paradox of Corporate Sustainability Due Diligence: Impact on the Financial Sector

In this article, the author examines the obligations imposed on companies, particularly financial undertakings, by two key regulatory initiatives: the Responsible and Sustainable International Business Conduct Act (RSIBCA) and the Corporate Sustainability Due Diligence Directive (CSDDD). Both frameworks aim to introduce hard law requirements for sustainability due diligence, covering human rights and environmental impacts. While the RSIBCA is still subject to political approval in the Netherlands, the CSDDD has been adopted and imposes binding obligations across the European Union after adoption by the Member States. The article highlights the key differences and similarities between these initiatives and their specific impact on regulated financial undertakings. Through fictional case scenarios, the article explores how financial undertakings must navigate the complexities of due diligence, climate transition plans and general duty of care under these rules.