CSRD for Asset Managers: Sustainability Reporting for Investment Firms

Whether your firm is a boutique asset manager, a newly authorised investment firm, or a subsidiary serving institutional clients, sustainability reporting is becoming a core expectation across Europe. Some organisations fall directly under CSRD, while others follow the VSME Standard or produce CSRD-aligned disclosures to satisfy banks, investors, and due-diligence questionnaires. Either way, clear reporting helps demonstrate how your investment strategies handle environmental and social risks — and the impacts those investments have on the wider economy.

For small firms in particular, the real challenge is managing data volume: portfolio exposures, funded emissions, ESG integration processes, and alignment with SFDR. This guide breaks down what matters most and how to implement it without enterprise-grade systems.

To start with broader context, see the EU-wide overview of CSRD deadlines.

1. Why CSRD Matters for Small Asset Managers

Asset managers sit at the centre of Europe’s sustainable finance framework. Large clients, private wealth customers, and institutional investors increasingly expect consistent, comparable disclosures — regardless of firm size. Even when not strictly in CSRD scope, many firms adopt CSRD-aligned reporting because:

• Investors expect transparency across funds, mandates, and stewardship practices.
• Regulators connect frameworks, especially CSRD, ESRS, SFDR, and the EU Taxonomy.
• Portfolio companies request sustainability data, which asset managers eventually need to pass through to clients.
• Banks and distribution partners evaluate sustainability governance when approving products.

A structured approach makes your firm more resilient, more competitive, and easier to evaluate during due-diligence.

For SMEs navigating choices, the comparison guide CSRD vs VSME: Which One Applies? provides a helpful starting point.

2. What CSRD Expects from Asset Managers

2.1 Focus on “financed impacts”

Unlike insurers or corporates, asset managers have relatively small operational footprints. The significant sustainability impacts come from:

• Portfolio company emissions
• Exposure to carbon-intensive sectors
• Social impacts within value chains
• Risks arising from transition policies
• Opportunities from sustainable investment themes

This is why Scope 3 Category 15 (financed emissions) becomes central to your reporting.

2.2 Portfolio-wide sustainability profiles

CSRD expects asset managers to describe:

• How sustainability considerations influence investment strategies
• Portfolio exposure to climate and social risks
• How stewardship, engagement, and voting address sustainability issues
• Policies for screening, exclusions, and ESG integration
• Metrics that illustrate the sustainability performance of assets under management

These requirements align strongly with ESRS E1 (climate), S1–S4 (social topics), and G1 (business conduct).

2.3 Narrative as important as metrics

CSRD emphasises explainability. Many small firms do not have full emissions data for every holding. A proportionate approach is acceptable:

• State what data you collect
• Explain estimation methods
• Clarify gaps and improvement plans

Investors now prefer this clarity over overly polished—but opaque—statements.

For SMEs looking at workable reporting structures, The VSME Basic Module Explained details how simplified reporting works while remaining ESRS-aligned.

3. Tracking Scope 3 Financed Emissions

Scope 3 financed emissions are the key metric for asset managers under CSRD and SFDR. But for small firms, they can feel unmanageable. Here’s how to approach them realistically.

3.1 Start with available data

Obtain GHG disclosures from:

• Company sustainability reports
• Data providers
• Regulatory filings
• Fund-of-fund providers

If a holding has no reported emissions, use estimation factors. These can be sector averages, revenue-based models, or methodology from public sources.

3.2 Categorise data quality

A simple three-tier approach works well:

1. Reported, verified values
2. Reported, unverified values
3. Estimated values

Disclose the mix. Investors appreciate transparency over precision.

To understand how to choose appropriate emissions data, refer to the guide on Emission Factor Selection.

3.3 Calculate financed emissions

AUM-weighted calculations are typically used:

Financed emissions = issuer emissions × (investment value ÷ issuer enterprise value)

Most small firms outsource this step to analytics platforms. Manual calculation is still acceptable for concentrated portfolios (e.g., < 40 positions).

3.4 Link emissions to risk

Financed emissions are not an isolated metric; CSRD expects connection to:

• Transition pathways
• Sensitivity to carbon price increases
• Sector-level decarbonisation
• Portfolio construction decisions

This is also required under SFDR’s Principal Adverse Impact (PAI) indicators.

4. Aligning CSRD and SFDR: What Small Firms Must Do

SFDR and CSRD are deeply connected:

• CSRD supplies the sustainability data that SFDR requires for product-level disclosures.
• SFDR requires investment firms to explain how sustainability risks affect returns and how adverse impacts are considered.
• CSRD requires the firm itself to report on sustainability risks, governance, and impacts.

4.1 CSRD helps you complete SFDR PAI tables

Many PAIs rely on:

• GHG emissions
• Fossil fuel exposure
• Social breaches
• Gender metrics
• ESG policy disclosures

CSRD creates a more structured way to gather this input. Over time, reliance on estimates will reduce as more portfolio companies report under CSRD.

4.2 Clarify your sustainability approach

A small firm can explain its strategy in practical terms:

• Do you consider ESG factors during investment research?
• Do you apply exclusions or screens?
• Do you engage with portfolio companies?
• Do you vote shares with sustainability topics in mind?
• How does this vary across products?

This satisfies CSRD, SFDR, and most client RFPs.

4.3 Document your due-diligence

A simple, consistent process is enough:

• Check for controversies and breaches
• Review climate and social indicators annually
• Apply additional scrutiny for high-risk sectors
• Document escalation pathways

This also reviews your value-chain expectations, consistent with guides like CSRD Supplier Requirements.

5. Structuring a CSRD-Aligned Report for Asset Managers

5.1 Strategy

Explain how sustainability themes influence:

• Investment philosophy
• Product design
• Long-term risk outlook
• Value creation for clients

5.2 Governance

Describe how your firm oversees sustainability:

• Who is responsible for ESG?
• How often does the team review risks?
• Are sustainability considerations part of investment committee decisions?
• How do you monitor conflicts of interest?

5.3 Materiality (double materiality)

Small firms can keep the assessment simple:

• Which sustainability issues materially affect your assets?
• Where do your investments create environmental or social impacts?
• Which topics matter most to clients?

5.4 Metrics

Focus on the essentials:

• Scope 1, 2 and 3 financed emissions
• Fossil fuel exposure
• Low-carbon technology exposure
• Social indicators (violations, workforce data where available)
• Stewardship metrics (engagements, votes)

5.5 Improvement plan

CSRD encourages transparency about future actions, such as:

• Expanding data coverage
• Improving estimation methods
• Strengthening stewardship processes
• Increasing transparency around voting or engagement outcomes

This demonstrates commitment without overpromising.

6. Practical Steps to Implement CSRD in a Small Asset Management Firm

Step 1 — Inventory your portfolios

List all funds and mandates. Identify which holdings already have good sustainability data and which require estimation.

Step 2 — Choose your reporting framework

Small firms often adopt a CSRD-aligned structure using simplified disclosures, similar to the VSME approach, until they reach full compliance.

Step 3 — Build a minimal data model

Start with:

• Company name
• ISIN
• Carbon emissions (S1, S2, S3 if available)
• Enterprise value
• Sector and geography
• ESG controversies

Avoid over-engineering until your process stabilises.

Step 4 — Produce narrative disclosures

Cover strategy, policies, risks, and governance in short, clear sections.

Step 5 — Validate against SFDR

Ensure PAI indicators and SFDR Article 6/8/9 product statements rely on the same data logic.

Step 6 — Engage with clients and distributors

Provide a consistent dataset and a clear explanation of your approach. This significantly reduces due-diligence workloads.

Frequently Asked Questions

Do small asset managers have to comply with CSRD?

Only firms meeting CSRD thresholds or listed on EU regulated markets report mandatorily. However, many smaller investment firms still produce CSRD-aligned statements because distributors, institutional clients, and regulators expect high-quality sustainability data. For broader context, see CSRD for SMEs: The Complete 2025 Guide.

How can small firms calculate financed emissions without expensive tools?

Begin with available emissions data from company reports or public datasets. Use sector averages where necessary and disclose the proportion of estimates. For guidance on choosing data sources, see the Emission Factor Selection Guide.

What’s the relationship between CSRD and SFDR for asset managers?

CSRD provides the company-level sustainability data that SFDR requires for product disclosures. SFDR requires asset managers to evaluate adverse impacts and sustainability risks. A CSRD-aligned report improves data consistency across PAI indicators and client reporting. For SMEs deciding on reporting pathways, CSRD vs VSME offers a useful comparison.

What if my portfolio companies don’t report emissions yet?

Use reasonable estimation methods and state your approach transparently. CSRD emphasises clarity over completeness in the early years. Templates from simplified reporting frameworks, such as the VSME approach outlined in The VSME Basic Module Explained, can help structure your disclosure.

Key Terms

• Financed Emissions: Emissions associated with investments, often the largest footprint for asset managers.
• CSRD: EU Directive requiring structured sustainability reporting across environmental, social, and governance topics.
• SFDR: EU regulation governing sustainability disclosures for financial products and investment firms.
• PAI Indicators: Metrics under SFDR for assessing adverse impacts.
• ESRS: European Sustainability Reporting Standards used for CSRD reporting.

Conclusion

Small asset managers can meet CSRD and SFDR expectations with a structured, proportionate approach. Start with achievable Scope 3 financed emissions estimates, build narrative clarity into your reporting, and create a simple data model that can grow over time. With consistency and transparency, sustainability reporting becomes a competitive advantage — strengthening client trust and positioning your firm for long-term resilience.