Following in the footsteps of the European parliament earlier this month, the Council of the European Union has now finalised the legislative process by adopting the Corporate Sustainability Reporting Directive (CSRD), a move which is welcomed by the European Fund and Asset Management Association (EFAMA), it announced.

The move comes days after the first set of European Sustainability Reporting Standards (ESRS), which give life to the double materiality principle established by the CSRD, were finalised by EFRAG and submitted to the European Commission for adoption.

Mandatory European sustainability reporting standards are crucial as insufficient availability of ESG data is a key impediment to realising the full potential of the EU’s sustainable finance regulatory framework, EFAMA stated.

“As information preparers under the Sustainable Finance Disclosure Regulation (SFDR), asset managers will undoubtedly benefit greatly from relevant, comparable, reliable and public ESG metrics of companies’ activities and financial risks,” the Associaiton said.

However, the first available corporate reports are only expected from 2025 and the full scope for all applicable firms will only be in place from 2028 onwards, it added. In the interim, therefore, “the chronic lack of corporate ESG data will unfortunately remain an issue, leading to uncertainty in the sustainable investing arena”.

EFAMA CSRD timeline

Tanguy van de Werve, director general at EFAMA, said: “CSRD is undoubtedly a crucial piece of the puzzle that will allow asset managers to further promote sustainable investing and to more accurately meet their regulatory requirements.

“We commend the European Commission for its original proposal and the co-legislators for prioritising this file. However, with the availability of these corporate reports being staggered between 2025 and 2029, our industry will be left picking up the ESG data pieces in the meantime.”

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