The Dutch Federation of Pension Funds has sent a letter to the European Parliament urging it to adopt the proposal on including institutional investors in the Corporate Sustainability Due Diligence Directive (CSDDD) during the plenary debate on 1 June.

The CSDDD aims to require companies to conduct sustainability due diligence to prevent human rights violations and environmental damage in their value chains.

On 25 April, the Committee on Legal Affairs voted in favour of the CSDDD, with an amendment (Article 8a) adopted to give institutional investors and asset managers a role within the CSDDD, which the Dutch Federation of Pension Funds said it welcomed.

Although a large majority voted in favour of the amended text during the committee debate, the federation noted that some political groups would still like to reject the amendment on the role of investors in the plenary vote this week.

“The Pension Federation considers this undesirable and calls for the text of the Committee on Legal Affairs to be adopted in its entirety,” the federation stated.

It added that it supported the inclusion of investors as it believed the CSDDD should be closely aligned with the OECD Guidelines, where investors are in scope.

Furthermore, the federation said the mandatory inclusion of the investment chain helped investors achieve their voluntary commitment, and as pension funds rely on outsourcing partners such as asset managers and data providers, all organisations in the investment chain should be either required or strongly incentivised to work together in addressing human rights violations and environmentally adverse impacts.

“The CSDDD should recognise that institutional investors do not engage with the investment value chain in the same manner as other companies,” the federation continued.

“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 patchwork of national rules.”

Share Story: