Pension insurance not included in the scope of application.

The negotiators from the European Parliament and the Council reached a provisional agreement on the draft Corporate Sustainability Due Diligence Directive (CSDDD) in the early morning of 14 December. As a result, the parties agreed that the financial sector should be temporarily excluded from the scope of the directive. This also eliminates the critical categorisation of the statutory pension insurance as a financial enterprise for the time being.

Proposal for a directive and inclusion of pension insurance

On 23 February 2022, the European Commission presented a Proposal for a Corporate Sustainability Due Diligence Directive (CSDDD). The scope of application of the financial enterprises affected by this should also include statutory pension insurance institutions within the meaning of Regulation (EC) No. 883/2004 of (EC) No. 987/2009. This would mark a departure from the understanding of the term "entity" used in EU law and in the case law of the ECJ (European Court of Justice)..

The German Social Insurance (DSV) had supported in a first opinion that all workers inside and outside the EU have access to healthy working conditions. Child labour and forced labour should also be abolished worldwide. However, the meaning and purpose of the European Commission's intention to include pension insurance institutions in the scope of application was criticised.

The social security institutions as a whole, such as the statutory pension insurance institutions, can act as entrepreneurs and also operate in the capital market. However, its investment opportunities of financial resources are subject to strict legal regulation as well as close monitoring in all EU Member States. Accordingly, in a further Opinion, the German Social Insurance (DSV) had proposed to delete the reference to the statutory pension insurance institutions.

As a result, the European Parliament deleted the reference to statutory pension insurance in its position. The European Council had previously reformulated the inclusion of statutory pension insurance institutions into an optional provision.

Trialogue and provisional agreement

In the run-up to the last trialogue, a majority of Member States supported the Spanish Council Presidency's proposal to exclude the financial sector from the scope of the directive. The Council Presidency has thus complied with a request from France. However, this proposal has been strongly criticised in parliamentary circles, as well as by the Netherlands and Denmark.

The provisional agreement temporarily excludes the financial sector from the scope of the directive. A decision on its possible future inclusion will be made at a later date on the basis of the still undetailed impact assessments. As a result, the critical categorisation of the statutory pension insurance institutions as financial companies will no longer apply for the time being.

What's next?

The provisional agreement must now be formally adopted by the European Parliament and the Council.