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EFAMA
European Commission’s Omnibus initiative should also be used to make CSRD consistent with SFDR.
On Wednesday, the Board of the European Fund and Asset Management Association (EFAMA) met in Brussels to discuss the European Commission’s much-needed competitiveness and regulatory simplification agenda. This included the Commission’s upcoming “simplification” Omnibus proposal, which aims to reduce the sustainability reporting burden on EU companies and make them more competitive in a fast-changing world.
To make this a successful exercise for both corporates and investors, the Commission must ensure consistent definitions and reporting requirements across existing EU legislations. This includes not only the Corporate Sustainability Due Diligence Directive (CSDDD) and Corporate Sustainability Reporting Directive (CSRD), but also the Sustainable Finance Disclosure Regulation (SFDR).
European asset managers occupy a unique position in that they must prepare CSRD reports for their own operations (like any other corporate firm) while also being users of CSRD reporting in their role as investors. Sustainability reporting by investee companies guides their sustainable investments and allows them to comply with their own sustainability reporting obligations under the SFDR. Without available CSRD data, asset managers are reliant on ever more expensive ESG data and ratings from third-party providers.
The European investment management industry is also seeking urgent confirmation that asset management companies are not required to include clients’ assets as part of their own CSRD reporting. This is crucial as, while the CSRD text rightly excludes fund products (UCITS funds and AIFs) from reporting, it is not clear enough that clients’ investments – which are not part of an asset manager’s balance sheet given the agency nature of its business – must not be seen as part of its ‘value chain’.
EFAMA looks forward to the upcoming dialogue with lawmakers and other stakeholders to support the European Commission in making the EU more competitive, and in improving the consistency, usability and effectiveness of the EU sustainability reporting framework.
