Asset managers are expressing frustration over corporate lobbyists’ efforts to weaken the Corporate Sustainability Reporting Directive (CSRD), a crucial EU regulation aimed at compelling companies to disclose data on various aspects, including emissions, water usage, and family leave policies. Although the CSRD became law last year, detailed implementation instructions are still pending, and the European Commission is preparing to release a delegated act.

Resistance to the draft requirements is arising both within and outside the European Union due to the global scope of the CSRD. Approximately 50,000 companies will eventually need to comply with these standards, and asset managers depend on their disclosures for constructing sustainable portfolios. Efforts to dilute the CSRD’s provisions raise concerns about undermining the directive’s effectiveness, with possible concessions including reducing requirements, delaying others, and allowing companies to determine the materiality of disclosed information.

The asset management industry has long advocated for improved corporate disclosures on environmental, social, and governance metrics to ensure transparency and compliance with sustainable finance regulations. Despite opposition from corporate lobbyists, the European Commission is prioritizing specific aspects of the CSRD, such as mandating reporting of carbon emissions and identification of significant Scope 3 emissions. The CSRD’s success relies on the European Commission adhering to recommendations from the European Financial Reporting Advisory Group (EFRAG), even as corporate lobby groups actively oppose these standards.

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