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Investor group fears ‘slide’ in sustainability rules

Investors who manage a combined total of €6.3 trillion in assets have urged the European Commission to “preserve the integrity and ambition” of the EU’s sustainable-finance framework.

The commission is expected to announce an ‘omnibus’ package on 26 February, which the investors fear could include changes to sustainability rules.

These include the EU Taxonomy Regulation, the Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD).

A commission paper published last month said that the package would cover “a far-reaching simplification in the fields of sustainable-finance reporting, sustainability due diligence and taxonomy”, adding that it would aim to prevent smaller companies being subject to “excessive reporting requests”.

A joint statement on the issue has been published by three leading European investor bodies (Eurosif, IIGCC, and the PRI), who say that their calls is backed by almost 200 investors and other financial organisations.

Regulatory uncertainty

The investors warn that re-opening these regulations in their entirety risks creating regulatory uncertainty and “could ultimately jeopardise the commission’s goal to re-orient capital in support of the European Green Deal”.

The group describes the rules as “fundamental cornerstones of the EU’s sustainability policy architecture”, adding that they are crucial for long-term sustainability and economic growth in Europe.

“While recognising the need for targeted improvements, the joint statement emphasises the importance of long-term policy stability and highlights the dangers of wholesale reopening of the three laws that could lead to a significant weakening of corporate-sustainability disclosures, which are essential for investment decisions,” the statement says.

The investors say that, while the support plans to simplify and improve the framework, there should be a focus on streamlining the technical standards and providing clear guidance on implementation.

They argue that the regulations are already having a positive impact on investment, and that any “slide” in reporting standards could undermine forthcoming initiatives such as the Clean Industry Deal.