POSITION | Voorstander van CSDDD-voorstel, maar tegen uitbreiding reikwijdte naar beleggingen
DUFAS is in favour of the CSDDD proposal but does not support suggestions extending CSDDD due diligence to investee companies
DUFAS supports the European Commission proposal for a Corporate Sustainability Due Diligence Directive (CSDDD) published on 23 February 2022. We welcome that CSDDD places human rights and environmental due diligence requirements on large firms catered to supply chains and contractual business relationships. DUFAS emphasizes that ESG due diligence is a crucial aspect of current asset management practice, but the CSDDD due diligence requirements are not fit for purpose for the investor-investee relationship.
What do we support exactly in connection with asset managers?
DUFAS supports the application of CSDDD to asset managers, provided of course they fall within the threshold of CSDDD. However, due diligence requirements under CSDDD should only relate to (i) due diligence on the own operations like any other large undertaking, (ii) the supply chain and (iii) their clients to whom asset managers offer investment advice or individual portfolio management services (mandates), excluding the value chain as such clients.
What do we not support?
DUFAS does not support extending the CSDDD due diligence to investee companies. In other words, we do believe that CSDDD due diligence requirements, and the attached civil liability proposed under CSDDD, should not apply to each and any investment an asset manager makes in the execution of the investment policy of an investment fund, - UCITS or AIF- , or in connection with investment services such as the management of an individual client portfolio or investment advice rendered by an investment firm under the MiFID regime or by an UCITS or AIF investment management company. In other words, we do not support extension of CSDDD due diligence requirements for asset managers to investee companies for a number of reasons explained further in this position paper. For the avoidance of a doubt, a specific carve out should therefore be made for investment funds – UCITS and AIFs-, and for due diligence on investee companies in connection with investment services as defined in MiFID rendered by asset managers to their clients.
Potential impact?
The ultimate consequence of a too stringent due diligence regime under CSDDD, also because of the potential civil liabilities attached, may force asset managers to refrain from certain investments, but also could lead to divestments as a result of such legal requirements. This may have a major impact on potential of investments to support the transition to a sustainable economy and may even exclude for example investments in certain emerging markets for that matter.
More Information
Want to know more or have questions about this topic? Send an email to Randy Pattiselanno, DUFAS manager strategy & regulatory affairs, or Ivan aan den Toorn, DUFAS policy advisor sustainability. Our ESG Due Diligence expert group will continue to monitor CSDDD developments closely and share them with its members.
