Investors With €6.6 Trillion Urge EU to Stand Firm on Green Regulations Amid Backlash

More than 200 financial sector actors including 162 investors with a combined asset under management of €6.6 Trillion have supported the call to European Union (EU) Commission to "preserve the integrity and ambition" of the EU's sustainable finance framework.

The Institutional Investors Group on Climate Change (IIGCC), the European Sustainable Investment Forum (Eurosif) and the Principles for Responsible Investment (PRI) issued a joint statement, on February 4, warning that reopening the regulations in their entirety for revisions can bring legal uncertainty and jeopardise Europe's economic competitiveness and harm investment.

This comes amid alarm raised by the EU Commission's Omnibus Package which is expected to be introduced on February 26 and is feared to lead to major revision of key sustainability requirements.

Following backlash for imposing reporting burden on businesses, the EU Commission President Ursula von der Leyen, announced to create an Omnibus Simplification Package intended to streamline reporting requirements in three EU Green Deal laws, the EU Taxonomy, the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

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EU officials have assured that the proposal will make limited changes to ease the reporting burden for small businesses. Some member countries such as Germany and France even want the EU to delay the implementation of the regulation.

However, investors believe that these rules are “fundamental cornerstones of the EU’s sustainability policy architecture”. The statement said that the rules facilitate investors to make informed decisions to “manage risks, identify opportunities and ultimately reorient capital towards a more competitive, equitable and prosperous net-zero economy.”

Aleksandra Palinska, executive director at the Eurosif, said, “EU rules on corporate sustainability reporting have been expected to fill the existing data gap. Sweeping changes to these rules, before they are fully implemented, will create regulatory uncertainty and are likely to hinder the contribution investors can make to sustainable growth.

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Signatories argued that a “more effective approach would be to focus on streamlining the technical standards and provide clear implementation guidance.”

In their statement, investors mentioned that European companies had reported €440 billion of taxonomy-aligned capital expenditure.