Recital (17)

Article 29a(1) of Directive 2013/34/EU requires parent undertakings of groups of a certain size to prepare and publish sustainability reporting at consolidated level. However, it is appropriate to increase the flexibility in the case of financial holding undertakings. In particular, where a group of that size exists only by virtue of the diverse investments of a financial holding undertaking, consolidated reporting might present practical difficulties and burdens and be of limited use to other market participants. Consequently, financial holding undertakings that are parent undertakings of such groups should have the option to choose whether to report consolidated sustainability information or whether to omit such information. That option should be strictly limited given its objective. It should only apply where the parent undertaking meets the definition of a financial holding undertaking, including the requirement not to involve itself directly or indirectly in the management of the subsidiary undertakings, without prejudice to its rights as a shareholder. Those rights include the right to vote at general shareholder meetings, which could, depending on national company law rules, inter alia, relate to the appointment of members of the management, administrative and supervisory bodies of the undertakings in which holdings exist, in order to ensure the proper oversight and protection of those investments. Additionally, financial holding undertakings should only have that option where they have holdings in undertakings whose business models and operations are independent of one another. This excludes cases where the subsidiaries of a financial holding undertaking are closely interconnected through their business activities, for example when the activities of one subsidiary enable or directly support the activities of another subsidiary. Finally, that option should not affect any reporting obligations that might apply to other undertakings in the group, for instance if an undertaking in the group falls within the scope of Article 19a or 29a of Directive 2013/34/EU in its own right.