Overall, the legal acts presented by the European Commission have to be assessed as positive but the challenges for the real and financial industry regarding the implementation are immense, not just timewise.
In respect of the revision of the Non-Financial Reporting Directive (NFRD), BAI Managing Director Frank Dornseifer sees a direct connection to previous criticism: “Our criticism regarding the first draft of the disclosure directive by the RTS was based on the fact that intermediaries were obligated to collect and provide information to investors, information which does not even fully exist yet. In that case, the blame would undoubtedly but wrongfully be passed to the financial industry. Now, the real economy has to carry that burden on a larger scale.”
From the BAI’s perspective, the new directive for sustainability reporting of corporations remedies and also helps intermediaries to fulfill their own disclosure requirements. Together with the second and revised version which was published in February, this is rated as a big step forward but it also means that many medium-sized companies will have to fulfill the disclosure requirements. The BAI will now shift its focus to make sure to reach a coherent approach, so that the taxonomy will be completed in the first step and consequently the RTS disclosure directive shall be applicable, of course following the principle of proportionality. Due to the alteration and significant expansion of its area of application (the EU-commission expects that around 50,000 corporations have to follow the new standards), the NFRD will be renamed to Corporate Sustainability Reporting Directive (CSRD) and has to be implemented into national law by December 1, 2022. The goal is to generate European-wide harmonized and comparable sustainability reports in which non-financial information has the same significance as financial information.
Regarding the total package, Frank Dornseifer further comments: “With the delegated legal acts which were passed yesterday by the European Commission, the requirements for the fund and financial industry take shape. The scope certainly is on the AIFM- and UCITS-directive and the implementation will require a major effort. The European Commission should keep that in mind and very carefully contemplate whether and to which extent e.g., the review of the AIFM directive needs to be tackled. Applying a sense of proportion is essential. Furthermore, the BaFin should withhold with respect to transitional standards or similar for sustainable fonds and financial products, respectively.”
The BAI dedicates a special theme day on April 29, 2021, to ESG and Sustainable Finance within the virtual Alternative Investor Conference next week, featuring a keynote presentation about Green Investments held by the member of the Council of Economic Experts Prof. Dr. Veronika Grimm, expert contributions for the integration of ESG risks into the investment and risk process of investors and investment companies, as well as the panel “ESG – From Awareness to Success”.
More information about the conference can be found under https://www.ai-conference.com
Bundesverband Alternative Investments e.V. (BAI)
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