BVI: CSDDD ignores the difference between asset managers as companies and as investors
On June 1, 2023, the plenary vote took place in the European Parliament regarding the report of the Committee on Legal Affairs on the EU Corporate Sustainability Due Diligence Directive (CSDDD).
As an extension of the Commission proposal, the report provides for new due diligence requirements for asset managers on ecological responsibility and compliance with international standards of human rights in their investment decisions. Since March 2021, large asset managers with more than 500 employees and institutional investors such as insurance companies and pension funds are required under the Sustainable Financial Disclosure Regulation (SFDR) to introduce due diligence measures to address the principle adverse impacts (PAI) of their investment decisions in relation to environmental, social and labour concerns, respect for human rights, anti-corruption and anti-bribery, and to disclose the identified adverse impacts.
PAIs must be determined for each individual investment decision in portfolio companies. Managers of UCITS as well as AIFs are furthermore obliged to consider the identified adverse impacts in their investment processes. In addition, the due diligence requirements of SFDR are to be further tightened in the future.
A spokesperson for the German Investment Funds Association BVI states:
"The extension of due diligence requirements under the CSDDD ignores the difference between asset managers as companies and as investors. Unlike their contractual relationship with a service provider, asset managers as investors have only limited influence and participation rights."
“Furthermore, the SFDR already imposes due diligence obligations on asset managers regarding the adverse impacts of their investment decisions on sustainability. The SFDR is also better tailored to the specificities of the fund industry."
"The new EU directive once again creates additional bureaucracy through duplicate regulations that are contradictory in detail. The EU Commission should first evaluate the impact of the SFDR on dealing with environmental and social problems in practice and then decide on further requirements."