Feb 4, 2025
Investors holding 6 trillion euros are cautioning the EU against diluting environmental regulations.
Investors with assets totaling 6.6 trillion euros have called on the European Union to maintain its sustainability regulations, as Brussels plans to reduce bureaucracy related to green finance.
This month, the European Commission will unveil a proposal aimed at simplifying reporting obligations under sustainability frameworks, as some companies have reported these requirements to be excessively complicated.
In a joint statement released on Tuesday, investor groups such as the Institutional Investors Group on Climate Change, the European Sustainable Investment Forum, and the Principles for Responsible Investment expressed that a comprehensive overhaul of these rules could have detrimental effects by hindering investments in sectors that Europe seeks to develop.
The statement, also endorsed by investors like AXA Investment Managers and L&G Asset Management, noted, "Altering these regulations in their entirety risks generating regulatory uncertainty and could ultimately undermine the Commission's objective of redirecting capital to support the European Green Deal."
The Commission intends to simplify the EU's corporate sustainability reporting regulations, its due diligence requirements—which mandate that companies assess human rights and environmental impacts within their supply chains—and a third regulation that categorizes climate-friendly investments.
This initiative aims to counter U.S. President Donald Trump's pledge to eliminate regulations while also addressing demands from struggling sectors to lessen bureaucratic constraints.
EU officials have indicated that the proposals will feature minor adjustments to alleviate the reporting obligations for smaller enterprises. However, certain member states, including Germany and France, are advocating for the EU to take more extensive measures and postpone the regulation's rollout.
Leo Donnachie, senior policy manager at IIGCC, stated that the loss of access to information about companies' sustainability credentials could impede investment as Europe strives to compete with China and the U.S. in the clean technology sector.
"Investors require access to this data to make informed decisions," he emphasized.
Contrarily, some industry stakeholders argue that the current data requirements impose "an excessive bureaucratic burden on the industry," according to Patricia Volhard, head of European Funds Regulatory practice at law firm Debevoise & Plimpton.
Former European Central Bank president Mario Draghi has asserted that the EU needs up to 800 billion euros in yearly investments to remain competitive with economic rivals.
Donnachie indicated that Brussels should contemplate streamlining the technical aspects of the sustainability regulations, but that postponing or completely revamping them would lead to undesirable instability.
This month, the European Commission will unveil a proposal aimed at simplifying reporting obligations under sustainability frameworks, as some companies have reported these requirements to be excessively complicated.
In a joint statement released on Tuesday, investor groups such as the Institutional Investors Group on Climate Change, the European Sustainable Investment Forum, and the Principles for Responsible Investment expressed that a comprehensive overhaul of these rules could have detrimental effects by hindering investments in sectors that Europe seeks to develop.
The statement, also endorsed by investors like AXA Investment Managers and L&G Asset Management, noted, "Altering these regulations in their entirety risks generating regulatory uncertainty and could ultimately undermine the Commission's objective of redirecting capital to support the European Green Deal."
The Commission intends to simplify the EU's corporate sustainability reporting regulations, its due diligence requirements—which mandate that companies assess human rights and environmental impacts within their supply chains—and a third regulation that categorizes climate-friendly investments.
This initiative aims to counter U.S. President Donald Trump's pledge to eliminate regulations while also addressing demands from struggling sectors to lessen bureaucratic constraints.
EU officials have indicated that the proposals will feature minor adjustments to alleviate the reporting obligations for smaller enterprises. However, certain member states, including Germany and France, are advocating for the EU to take more extensive measures and postpone the regulation's rollout.
Leo Donnachie, senior policy manager at IIGCC, stated that the loss of access to information about companies' sustainability credentials could impede investment as Europe strives to compete with China and the U.S. in the clean technology sector.
"Investors require access to this data to make informed decisions," he emphasized.
Contrarily, some industry stakeholders argue that the current data requirements impose "an excessive bureaucratic burden on the industry," according to Patricia Volhard, head of European Funds Regulatory practice at law firm Debevoise & Plimpton.
Former European Central Bank president Mario Draghi has asserted that the EU needs up to 800 billion euros in yearly investments to remain competitive with economic rivals.
Donnachie indicated that Brussels should contemplate streamlining the technical aspects of the sustainability regulations, but that postponing or completely revamping them would lead to undesirable instability.