EU Brings in Sweeping Reforms to Foster Sustainable Corporate Behaviour

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The European Union is set to introduce a new directive aimed at promoting sustainable and responsible corporate behaviour. The Corporate Sustainability Due Diligence Directive (CSDDD) will require large companies to conduct thorough due diligence on their operations and supply chains.

Key Provisions of the CSDDD

Companies will be required to assess the risks associated with their activities and ensure that they are not contributing to environmental degradation or human rights abuses.
The directive will apply to large EU companies meeting certain thresholds in terms of employee numbers and worldwide turnover, as well as third-country companies active in the EU.

Enhancing Crowdfunding Regulations

The European Commission has proposed amendments to the Regulatory Technical Standards (RTS) for crowdfunding service providers, which will enable them to keep personal data included in creditworthiness assessments for up to five years following loan repayment.

Review of EU Banking Rules

The EU’s financial watchdog, the European Banking Authority (EBA), is reviewing the EU’s banking rules as part of a broader effort to strengthen the sector. The review comes on the heels of a recent report highlighting the need for enhanced risk management and supervision in the EU’s banking system.

Luxembourg Financial Supervisory Authority Regulations

The Luxembourg Financial Supervisory Authority (CSSF) has published new regulations aimed at addressing the impact of Brexit on financial services. The CSSF has included the United Kingdom in its list of jurisdictions deemed equivalent for the application of national third-country regime rules, allowing UK firms to continue providing investment services and performing investment activities in Luxembourg.

Fintech Initiatives

Digital Securities and Tokenized Assets

The Luxembourg government has been actively promoting fintech innovation through a series of legislative initiatives. In 2019 and 2021, two laws were passed allowing the use of new technologies in the issuance, holding, and circulation of securities. The laws have paved the way for the development of digital securities and tokenized assets in the country.

Banking Union

Strengthening the Sector’s Resilience

The EU’s Banking Union aims to reduce risk in the banking sector through the establishment of a Single Resolution Mechanism and a Single Resolution Fund. Recent amendments to the EU’s banking rules have aimed to strengthen the sector’s resilience and improve risk management practices.

Financial Crisis Legacy

The financial crisis of 2008 has had a lasting impact on the EU’s financial regulatory landscape. A series of directives and regulations were introduced in response to the crisis, including CRD IV, CRR, and BRRD. These reforms aimed to strengthen banking supervision and resolution mechanisms, and have since been subject to ongoing review and refinement.

Stay tuned for further updates on these developments as they unfold!