Unipol Gruppo

The company suggests not including due diligence rules for subsidiaries in a holdings company structure which would limit the scope and ambition of the proposal.

The entity indicates 'Due diligence expectations on regulated financial undertakings should take into account the differences in terms of business model between financial institutions and companies of the “real economy” and provide for requirements that are appropriate in this context ... As a preliminary remark, Unipol Group would like to stress the importance to ensure consistency and better alignment of CSDD with other EU legislations. With specific reference to regulated financial undertakings, it is unclear at this stage how the proposal will fit with other legal requirements as set out by other EU regulations (e.g. Solvency II, SFDR) on sustainability issues. Policymakers should ensure that due diligence obligations do not duplicate or contradict the existing rules for the financial sector; otherwise, difficulties in practical implementation of the CSDD would lead to a fragmented network and to inefficiencies. This could happen in particular because the CSDD does not allow for consolidation. In the financial sector, a holding company structure is prevalent and due diligence plans and codes of conduct are usually decided at group level and then applied by subsidiaries. In addition, the parent company is usually assigned with the responsibility of corresponding with the lead regulator for the purpose of monitoring and supervision of the financial group. Different instead is the approach chosen by the Commission in the CSDD proposal as highlighted below. ...Unipol Group does not fully agree with this approach on due diligence communication, since it does not take into account the group companies’ structures and the way company law – including reporting requirements – applies with this respect. Hence, Unipol Group is concerned about the potential consequences on the financial sector and the impact in terms of costs and additional administrative burdens. ... Against this background, Unipol Group would like first to call on the co-legislators to amend the proposal in order make the due diligence obligations to apply at the consolidated group level only, which is where due diligence policies and processes are set up. This means that subsidiaries (and their value chains) should be expressly exempted. Conversely, each entity of an insurance group would be subject to high administrative burdens and costs, even though it is not subject directly to the CSDD according to the relevant threshold. Should this not be the case, Unipol Group proposes to allow the subsidiaries that are exempted from the obligation to report non-financial information under NFRD (and once adopted, the CSRD) to include the communication on due diligence obligations under CSDD in the consolidated management report of their parent company. Considering that, as proposed by the CSRD, those subsidiaries will be required then to publish the consolidated management report of their parent undertaking, such a proposal would increase clarity and consistency among EU legislation and would benefit both prepares and users of sustainability information by ensuring that this kind information is easily accessible.'

The entity is mainly asking for clarification or definitions. No clear position on the contents of the proposed directive could be found.

The entity indicates 'With respect to the definition of “value chain” in relation to regulated financial undertakings, which needs to be clarified to fully reflect the insurance sector’s specificities. To this end, the definition of a “client” in the financial sector value chain should be included in the CSDD so to avoid any legal uncertainty on the legal entities included in the definition and, consequently, in the scope of mandatory due diligence obligationsThe potential application to distribution agreements set up by financial institutions would have indeed significant implications with the risk to jeopardize business models innovation and the position of insurance companies in the market. '