Banking

PRI welcomes new European sustainability proposal

In a statement today, the international network of investors set out six key aspects it believes legislators should consider while creating the CSRD.

The signatories represent about $9.2trn in assets under management and include Amundi, Legal & General Investment Management, Morgan Stanley Investment Management, and AXA IM.

The recommendations include expanding the scope of the CSRD to include non-listed small and medium-sized enterprises from ‘high-risk sectors’ as it warns of “a risk to both investors and investees; an investor might need to exclude certain investees from its’ portfolio given a lack of disclosure on material sustainability information. This limits portfolio scope for investors and reduces funding opportunities for certain companies”.

PRI also urges the European Commission to “provide a clear timeline for moving from limited assurance to reasonable assurance,” and more generally set a clear timeline and standards for the CSRD to allow financial market participants to fulfil them in a timely matter.

The European Commission released a proposal for the CSRD in April 2021, to replace the Non-Financial Reporting Directive (NFRD) and plans to adopt it in late 2022.

It will cover 49,000 companies, compared to the 11,000 covered by the NFRD, and applies double materiality – meaning a company must disclose both how sustainability can affect the company, but also how the company impacts society and the environment – which the PRI statement fully supports.

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