EU: Dutch Federation of Pension Funds calls on MEPs to adopt JURI proposal on the Corporate Sustainability Due Diligence Directive
"Pensioenfederatie calls for inclusion of investors in the CSDDD", 26 May 2023
The Dutch Federation of Pension Funds has sent a letter in order to call on the European Parliament to adopt the proposal for the Corporate Sustainability Due Diligence Directive (CSSDD) during the plenary debate on 1 June. The CSDDD proposal aims to require companies to conduct sustainability due diligence to prevent human rights violations and environmental damage in their value chains.
On April 25, the Committee on Legal Affairs already voted in favor of the CSDDD. An amendment (Article 8a) was adopted to give institutional investors and asset managers a role within the CSDDD. The Dutch Federation of Pension Funds welcomed this. Although a large majority voted in favor of the amended text during the debate in committee, some political groups would still like to reject the amendment on the role of investors during the plenary vote next week. The Pension Federation considers this undesirable and calls for the text of the Committee on Legal Affairs to be adopted in its entirety.
We strongly support the inclusion of investors in the CSDDD through article 8a, for the following reasons:
- The CSDDD should be closely aligned with the OECD Guidelines, where investors are in scope, according to which they have a specific but important role to play. This is why the OECD issues specific guidance for institutional investors.
- Mandatory inclusion of the entire investment chain helps investors achieve their voluntary commitment. Pension funds rely on outsourcing partners such as asset managers and data providers. All actors in the investment chain should be either required or strongly incentivized to join forces in addressing human rights violations and environmental adverse impacts.
- The CSDDD should recognize that institutional investors do not engage with the investment value chain in the same manner as other companies. Article 8a provides for the appropriate tools – shareholder engagement and voting – in a manner that is proportionate to the degree of influence.
- This is an important improvement of the proposal of the European Commission and reflects the aforementioned OECD guidance for institutional investors. A European approach to sustainability due diligence requirements will avoid a patch-work of national rules.