The European standard setter for sustainability reporting, European Financial Reporting Advisory Group (EFRAG), writes in its recent consultation on implementation guidance that it intends to draft further guidance on sustainability reporting by financial companies. In response, we write that the European legislator should first provide clarity on the scope of the Corporate Sustainability Reporting Directive (CSRD), particularly with respect to individual asset management. We have previously argued successfully for this with the Dutch legislator.
Financial company value chain reporting
The CSRD requires companies to report on sustainability aspects in the value chain. This concerns, for example, the way in which suppliers deal with sustainability, but this can also concern the customers to whom financial services are provided. In doing so, the CSRD explicitly states that investments within certain financial products, such as AIFs and UCITS, are not covered by this obligation. Whether individual asset management mandates are covered by the CSRD is still unclear.
Individual asset management out of scope under Dutch law
Before EFRAG drafts further guidelines for reporting by financial firms, it is important that there is sufficient clarity on the scope of the CSRD. Earlier, we argued that individual mandates logically fall outside the scope of the CSRD. In response, the Ministry of Finance has clarified this in the draft implementation decision. It is important that the European legislator also provides this clarity. In the response, we have again listed the main arguments, including the existing transparency obligations under the Sustainable Finance Disclosure Regulation (SFDR).
Adequate attention to consistency within European legislation
Sustainability in the value chain also plays a central role within the envisioned European sustainable due diligence law, Corporate Sustainability Due Diligence Directive (CSDDD). The preliminary agreement between the European institutions on the CSDDD suggests that customer investments are outside the value chain of financial companies. Since the European legislator wants to create synergy between the CSDDD and the CSRD, DUFAS also highlights the importance of ensuring consistency between these initiatives.
