PensionsEurope has praised the "clear link" the European Union’s (EU) proposal for the Corporate Sustainable Reporting Directive (CSRD) has with the Sustainable Finance Disclosure Regulation.

The association has submitted feedback to the EU on the CRSD, noting that IORPs as investors are users of the data that companies will be required to provide under the legislative proposal for a CSRD.

“PensionsEurope is pleased that the intention is to create consistency between the Taxonomy Regulation and the Sustainable Finance Disclosure Regulation (SFDR) on the one hand and the Corporate Sustainability Reporting Directive and the future sustainable reporting standards on the other,” it stated.

In particular, it welcomes the “clear link” with the SFRD, which introduced reporting requirements on principal adverse impacts (PAIs) along with a broad set of 18 quantitative and qualitative indicators for investors including pension funds.

“Therefore, the financial sector essentially is required to report on information that does not yet need to be made public by companies. This means that pension funds will need to obtain information, partially based on estimates, from specialised data providers. As a result, data sets can diverge significantly and come at a significant cost,” the association noted.

Pensions Europe stressed the importance of a CSRD in aiding the requirements of the SFDR for pension funds.

“For the implementation of the responsible investment policy and own reporting obligations under the SFDR, pension funds need information on the companies they invest in across the spectrum of asset categories. The majority of these investments are in listed companies that would have already been subject to reporting under the NFRD, but some other investments may be brought in scope. This applies to private equity investments and smaller listed companies.”

However, it noted that for pension funds a very significant share of investments are located in the US or emerging markets and these will remain out of scope.

“We welcome the extension of the scope as it helps to develop responsible investment strategies in areas where data may still be lacking, such as private equity. At the same time, broad coverage of companies should not come at the expense of the depth of information. To conclude, PensionsEurope supports the introduction of the European Single Access Point and we support the proposal’s requirement for the limited assurance of sustainability reporting.”

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