‘Genuinely disappointed, deeply concerned’: AkademikerPension CIO Anders Schelde on Europe’s Omnibus vote

Of all those who have embraced the value of simplicity, Clarence ‘Kelly’ Johnson, is perhaps the most well-known. Johnson, an aeronautical engineer by trade, is credited with a design philosophy first popularised in the 1960s – keep it simple, stupid.

The latest to join the ranks of simplicity enthusiasts are European lawmakers. This week, the European Parliament voted in favour of simplifying sustainability reporting and due diligence requirements.

However, in the name of simplification, lawmakers voted to water down Europe’s sustainability framework. AkademikerPension, a Danish pension fund, has criticised the vote which contradicts the investor statement on Omnibus reforms the fund signed earlier this year.

AkademikerPension’s chief investment officer Anders Shelde told Net Zero Investor, “we are genuinely disappointed by the outcome of the vote and deeply concerned about the direction the EU is now taking”.

Too far

Europe’s Omnibus reforms targeted two key regulations - the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The European Commission tabled the initial proposals in February this year.

Then, earlier this week, lawmakers voted to reduce the scope of mandatory disclosure and due diligence requirements in a bid to simplify them.

“While adjustments were needed to some elements of the European sustainability framework, this is taking it too far”, says Schelde.

The Parliament’s new negotiating position restricts environmental reporting to firms with over 1750 employees and net annual turnover of over €450m. Due diligence scope revisions went even further - these are now restricted to companies with annual turnover of over €1.5bn and a workforce of over 5000.

The requirement for companies to publish transition plans would also be scrapped.

Investor loss

“The proposal represents a clear step backwards and a loss for investors, companies, and for the EU’s position as a global leader in responsible business conduct”, Schelde warns.

Schelde’s concern has to do with investor visibility over corporate transitions. In July, Akademiker joined 76 other investors to sign a statement communicating investor expectations from Europe’s quest for simplification.

The letter makes it clear that both CSDDD and CSRD have a high degree of investor support and a watering down of their core requirements would be against investor interest.

“When requirements for reporting and transparency are reduced, this inevitably results in less reliable data, weaker risk management, and a more unpredictable investment environment”, Shelde explained.

Schelde says the fund continues to stand by the joint statement. For Akademiker, he notes, robust reporting is a ‘fundamental prerequisite’ for the fund’s ability to manage long-term risks for members.

“This is why we fully support the position outlined in the document we have co-signed with other investors: that the EU must uphold and strengthen its sustainability framework in order to safeguard competitiveness and future-proof the European market”, he says.

Armed with a new negotiating position, the Parliament’s discussions with European governments are currently underway. By the end of the year, the EU’s Omnibus changes could become law.

Even though investors such as Akademiker support the effort to keep things simple, they unsurprisingly disagree that the ends justify the means. In its current form, as Schelde warns, Europe’s simplification drive risks violating a central tenet of Johnson’s original philosophy: simplicity doesn’t erode sophistication, it expects more.