The German government has rejected a proposal to limit the impact of the EU’s Corporate Sustainability Reporting Directive (CSRD) on pension funds and insurers.
The cabinet has examined proposals to change the German transposition of the CSRD put forward by the Bundesrat, the upper house of the German parliament, concluding that it does not see an opportunity to further amend the draft because it has exhausted any leeway under EU law.
The Bundesrat issued a statement on the draft law, welcoming the fact that the government took into account the principle of proportionality to transpose the CSDR into national law for occupational pension institutions. According to the law drafted by the government, only Pensionsfonds and Pensionskassen with more than 500 employees are obliged to report on sustainability.
The Bundesrat has suggested assessing the possibility of applying this principle to all companies in the insurance sector in the next steps of the legislative process.
“The business models of company pension schemes and insurers are comparable,” it said in the statement.
The German version of the CSRD drafted by the government exempted Pensionskassen, a type of insurance company providing occupational pensions in Germany, from reporting on sustainability if they don’t operate in the legal form of a stock corporation (AG) or European company (SE). This exception is based on EU law because the Insurance Accounting Directive does not apply to pension funds.
European regulations make a distinction between insurance companies and company pension schemes. Solvency II applies solely to insurers, while the IORP directive applies to occupational pension institutions, the government said in its response to the Bundesrat.
“It is irrelevant that German regulatory law defines pension funds as special life insurance companies,” it added.
The rules put forward by the cabinet have unsettled the company pension industry in Germany. Occupational pension association aba said in a statement sent to the Federal Ministry of Justice and Consumer Protection, responsible for drafting the law, that including pension funds with more than 500 employees under the scope of the German version of the CSRD is not based on European rules.
“Legally, [this] represents a significant tightening compared to the CSRD/Accounting Directive because (German) pension institutions are not covered [by those rules] at all,” aba added in the statement.
Germany will implement the CSRD gradually. From the fiscal year 2024, sustainability reporting only applies to large companies with more than 500 employees, and to further groups of companies in the following years until 2028.
Read the digital edition of IPE’s latest magazine
No comments yet