UN Working Group on Business and Human Rights concluded visit to Luxembourg.

Today the United Nations Working Group on Business and Human Rights concluded the Working Group’s visit to the Grand Duchy of Luxembourg. This is the first visit of any United Nations Human Rights Council’s Special Procedures mandate-holder to the country.

The purpose of the visit was to assess how the Government and the business sector discharge their respective duties and responsibilities under the UN Guiding Principles on Business and Human Rights (UNGPs). These include the duties and responsibilities to prevent, respect and remedy adverse human rights impacts of business activities.

In a statement at the end of the visit, the Working Group encouraged Luxembourg to support the inclusion the financial sector and investment funds within the European Union Directive on Corporate Sustainability Due Diligence (CSDDD). “These activities can and have led to adverse human rights impacts,” the experts said. A major discussion issue during the visit has been the latest developments in the European Union’s (EU) draft Corporate Sustainability Due Diligence Directive (CSDDD). The latest draft of this Directive was released on 1 December 2022. It was indicated to the United Nations Working Group that, once passed at the EU level, this Directive, which contains both mandatory due diligence requirements on some businesses, civil liability, and supervisory mechanisms, would become national legislation in Luxembourg. The Working Group has previously stated that such legislation is part of the ‘smart mix’ of measures to ensure corporate accountability for their adverse human right impacts.

A key issue with the CSDDD for many of those consulted is about whether the financial sector in Luxembourg would be included within its scope. The financial sector is a major sector of the Luxembourgish economy. The latest draft of the CSDDD indicates that the inclusion of the financial sector is to be optional for EU Member States and that the investment funds sector is to be excluded.

Many of the civil society organisations (CSOs), and a number of the businesses with whom the United Nations Working Group on Business and Human Rights consulted, indicated very strongly that the financial sector should be included in the CSDDD. Indeed, Luxembourg’s National Action Plans on Business and Human Rights (NAP) specifically stated that the financial sector was “particularly at risk of human rights violations”.

The United Nations Working Group notes with concern that there have been discussions at the EU level to exclude both the financial sector and the investment fund sector from the CSDDD.

Therefore, the United Nations Working Group recommends that the Luxembourg Government should include all elements of the financial sector which fall within the scope of the CSDDD within their national legislation implementing the CSDDD. The Working Group sees the CSDDD as a means for Luxembourg to position itself as a leader in the region, particularly in terms of sustainable finance, which includes human rights, environmental and climate change matters. It also urges the Luxembourg Government to reconsider their position of excluding investment funds from the scope of the CSDDD. According to the Working Group, there would also be value in the Financial Sector Supervisory Commission (CSSF) providing a series of examples of best practices and benchmarks in the financial sector (based on global practices) to assist businesses in preventing and addressing business-related human rights abuses.

The Working Group will submit a full report on its Country Visit to Luxembourg to the UN Human Rights Council in June 2023.