This position paper builds on PRI’s consultation response, reaction statement, key takeaways from a joint PRI & WBA roundtable on CSDD with policymakers and signatories held on 13th June 2022, and signatory feedback received over August 2022. The PRI welcomes the Commission’s proposal, but a number of improvements will be needed to make it an ambitious and efficient policy. In this paper we have decided to focus on key topics where PRI, in its unique position as a global investors’ organisation, can bring added value to the discussion.

PRI recommends that co-legislators:

  • Remove the pre-service limitation to investor due diligence to include ongoing assessments, throughout the value chain, in line with international standards.
  • Clarify the definition of ‘financial services’ to include equity investment.
  • Broaden the personal scope of EU companies under the directive, in line with the CSRD.
  • Harmonise definitions of negative impacts across CSDD, SFDR and CSRD.
  • Mandate stakeholder engagement when identifying actual and potential adverse impacts.
  • Broaden the range of sustainability factors that should be considered when setting variable remuneration.
  • Strengthen the link between variable remuneration and sustainability performance.
  • Take the wider workforce into account when setting variable remuneration.
  • Strengthen requirements on transition plans and increase alignment with CSRD
  • Clarify how companies can support the just transition
  • Define key terms in transition plan requirements

We also raise key concerns about ‘established business relationships’, ‘contractual cascading’ and director’s duties which we encourage co-legislators to consider.