ALFI warmly welcomes the CSRD proposal that will ensure that much more ESG reliable data are available in the European market. This is key to enable FMPs to satisfy their reporting duties under SFDR.
We are nevertheless concerned about the application timeline: per the current timetable, CSRD reports will be available at best in 2024 (in respect of the 2023 financial year), whereas SFDR reporting requirements will start in 2022, leaving a gap during which the necessary data will not be available, save for entities which are in the scope of NFRD and for a very limited set of data points.
We are also deeply concerned about the potential application of CSRD to investment funds which would either fall under the definition of a large undertaking or which are admitted to trading on a regulated market. Our reading of the current proposal suggests that CSRD reporting requirements would apply to listed funds from 1 January 2026 (assuming that listed funds would not be in a position to avail of the exemption that applies to micro-undertakings).
Depending on how the criterion of turnover is interpreted in the context of investment undertakings, investment funds might also qualify as large undertakings and as such, be subject to CSRD reporting requirements as from 2024 (in respect of 2023). We believe that these requirements are not adapted to investment funds which are not operating as enterprises. Investment funds are indeed financial products and as such are already subject to SFDR transparency requirements.
SFDR framework is much more adapted to their financial product nature and the information provided under SFDR periodic template is much more relevant to investors. Requiring investment funds to report also under CSRD would be redundant, would provide irrelevant information and add unnecessary costs for investors. We therefore urge to clarify in the CSRD proposal that investment undertakings subject to SFDR periodic reporting are exempted from the CSRD requirements. This is consistent with the overarching objective of the CSRD which, as indicated in the EC’s Q&As, should “ensure alignment with other EU initiatives on sustainable finance, in particular the Sustainable Finance Disclosure Regulation (SFDR) and the Taxonomy Regulation” and whose “aim is to reduce complexity and the potential for duplicative reporting requirements”.
ALFI
© ALFI - Association of the Luxembourg Fund Industry
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