ESG in the banking sector – CSSF review on diversity in management bodies of credit institutions

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On 10 October 2023, the CSSF published the outcome of an investigation launched in April 2023 on diversity in the management bodies of 46 less significant credit institutions.

On 10 October 2023, the Commission de Surveillance du Secteur Financier (CSSF) published the outcome of an investigation (CSSF Review) launched in April 2023 on diversity in the management bodies of 46 less significant credit institutions (LSIs).

 

1. Context

According to Article 38-2(8) of the law of 5 April 1993 on the financial sector, as amended (LFS), credit institutions must engage a broad set of qualities and competences when recruiting members to the management body and for that purpose shall put in place a policy promoting diversity on the management body.

Therefore, credit institutions must adopt a diversity policy and the CSSF oversees compliance with this requirement.

 

2. Key findings

The CSSF Review notes in particular the following:

LSIs that do not have a diversity policy are prompted to adopt and implement one without delay and any failure to abide by injunctions issued by the CSSF in this regard will result in severe measures, including sanctions.

The CSSF urges non-compliant LSIs to take measures to ensure compliance without delay.

These incomplete diversity policies must be adapted immediately.

The CSSF Review further specifies that there are still many management bodies that are fully composed of male members or have a majority of male members.

The CSSF concludes that there is still work to be done to improve the level of diversity within management bodies of LSIs.

 

3. Next steps

The CSSF emphasises that it will be focusing on compliance with diversity requirements, notably by carrying out regular investigations and checks and consequently, issuing sanctions in cases of shortcomings.

 

Contact our experts in the Banking & Financial Services team if you require any guidance or assistance with developing, implementing or reviewing your diversity policy within the constantly evolving ESG framework_

 

To read the CSSF Review, click here_

Download the press release

Luxembourg Newsflash – ESG in the banking sector – CSSF review on diversity in management bodies of credit institutions

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