EU omnibus proposal means ‘less information, less data’, say asset managers

Asset managers and investors are asking for more clarification on the impact of the simplification of the EU omnibus package, which they say could prevent them from accurately assessing their portfolios.

“We need stability,” Ophélie Mortier, chief sustainable investment officer at asset management firm DPAM, said on The Sustainability Omnibus Podcast.

While Mortier welcomes the simplification of some of the EU’s sustainability reporting directives, such as the corporate sustainability reporting directive (CSRD), she’s concerned about the potential reduction in scope.

Under the omnibus proposal, 80% of companies required to report were removed from the scope of the CSRD, while the information that could be requested from smaller companies would be limited under the corporate sustainability due diligence directive (CSDDD). Changes to the EU taxonomy, meanwhile, would mean a partial alignment would be considered sustainable.

“We will have less information, less data, from the companies to fulfill our own obligation of reporting,” said Mortier.

This reduction in scope means investors and asset managers will need to continue relying on estimates or third-party providers, which may not be as accurate and will also be costly.

“We are really eager to receive the information directly from the companies to be able to assess whether they are on the right track regarding, for example, the transition pathway,” said Mortier.

Tessa Younger, stewardship lead at investment and asset management firm CCLA, is strongly in favour of the EU sustainability disclosure rules, because they “help regulators and investors [and] help companies adopt improved standards”.

Although CCLA is based in London, it invests in many EU companies. The CSRD, CSDDD and EU taxonomy all help set a global standard for companies and investors, Younger said.

“If the EU rules are weakened, I think it could definitely affect other jurisdictions and not encourage them to maintain disclosure at that same sort of level,” she said on the podcast.

A stronger reporting framework will encourage more transparency about the type of climate change risk companies are facing and how it’s being managed, Younger said. That transparency “helps drive real change” by giving investors the information they need to hold companies accountable.

That transparency gives European companies a competitive edge, as having access to standardised, comparable information means asset managers and investors can accurately evaluate company risk. Companies that use the EU taxonomy, for example, tend to provide more useful information, Younger said.

“Where you’ve got regions where there’s less rigorous reporting, we might have investors much more exposed to hidden risks and unaddressed liabilities. So if the EU maintains [its] high reporting standards, [it] does create that level playing field that drives better business practice and supports long term resilience”.

To hear more about why Mortier and Younger are concerned about the EU’s omnibus proposal, listen to the latest episodes of the Sustainability Omnibus Podcast, available on Apple, Spotify, and all major podcast platforms.

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