Investors with €6.6 Trillion Warn EU: Don't Weaken Green Rules

Investors with a combined €6.6 trillion in assets under management have urged the European Commission to preserve the integrity and ambition of the EU's sustainable finance framework, warning that the upcoming Omnibus package could lead to wholesale revision of key sustainability requirements. The joint statement, supported by over 200 financial sector actors, including 162 asset owners and asset managers, highlights the risks of reopening these regulations in their entirety, which could create regulatory uncertainty and ultimately jeopardize the Commission's goal to reorient capital in support of the European Green Deal.

The Omnibus package, expected on 26th February 2025, aims to enhance Europe's competitiveness and streamline regulations, with key sustainability laws such as the EU Taxonomy, the Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD) set to be revised. However, investors argue that these regulations are fundamental cornerstones of the EU's sustainability policy architecture and are crucial for fostering long-term sustainability and economic growth in Europe.

Investors support the overall objective of simplifying and improving the coherence of the EU sustainable finance framework but argue that a more effective approach would be to focus on streamlining the technical standards and providing clear implementation guidance. They warn that a wholesale reopening of the three laws could lead to a significant weakening of corporate sustainability disclosures, which are essential for investment decisions, ultimately undermining the EU's long-term economic competitiveness and sustainability goals.

The intervention, shared with Commission President Ursula von der Leyen and key EU Commissioners, stresses that timely access to high-quality and comparable reporting is a prerequisite to inform and guide investment decisions. Investors propose a targeted approach to refine the framework, including streamlining technical standards based on industry feedback, providing clear implementation guidance, ensuring interoperability between European and international reporting standards, and leveraging digital solutions to reduce reporting burdens and improve data harmonization.

Stephanie Pfeifer, Chief Executive Officer at Institutional Investors Group on Climate Change (IIGCC), emphasizes the importance of maintaining the core principles of these regulations while addressing implementation challenges. She argues that by doing so, the EU can reinforce its global leadership in sustainable finance and support the reorientation of capital towards a more competitive, equitable, and prosperous net-zero economy.

Investors warn that initiatives like the forthcoming Clean Industrial Deal, aimed at ensuring the long-term competitiveness of Europe's net-zero industry and its economic resilience, could be undermined if sustainability reporting standards slide. They argue that this could further exacerbate the EU's estimated annual investment gap of €750-800 billion per year, hindering the EU's ability to attract investment in sustainable projects and achieve its long-term climate and sustainability objectives.

In conclusion, investors with €6.6 trillion in assets under management have urged the European Commission to preserve the integrity and ambition of the EU's sustainable finance framework, warning that the upcoming Omnibus package could lead to wholesale revision of key sustainability requirements. They propose a targeted approach to refine the framework, focusing on streamlining technical standards, providing clear implementation guidance, ensuring interoperability, and leveraging digital solutions. By doing so, the EU can maintain its global leadership in sustainable finance, support the reorientation of capital towards a net-zero economy, and achieve its long-term climate and sustainability objectives.