Investors overseeing €6.6 trillion in assets are urging the European Commission to preserve the integrity of its sustainability disclosure regulations amidst growing concerns over potential changes in the upcoming Omnibus package, scheduled for release on February 26. This package could significantly alter key sustainability frameworks, including the EU Taxonomy and the Corporate Sustainability Reporting Directive (CSRD), threatening to create legal uncertainty and undermine Europe’s long-term competitiveness.
A coalition of 200 financial sector leaders, including asset owners and managers, has voiced strong opposition to wholesale revisions, warning that such disruptions could jeopardize the European Green Deal’s goal of reorienting capital toward sustainable investments. “Reopening these regulations in their entirety risks creating regulatory uncertainty and could ultimately hinder investors’ ability to drive sustainable growth,” the statement reads.
The Threat of Uncertainty and the Need for Stability
With Europe facing an annual investment gap of €750-800 billion, investors are concerned that destabilizing sustainability regulations could hinder efforts to close this gap, particularly initiatives like the Clean Industrial Deal aimed at enhancing Europe’s net-zero industry competitiveness.
Aleksandra Palinska, Executive Director at Eurosif, emphasized the risks of abrupt changes before regulations are fully implemented, saying they could “hinder the contribution investors can make to sustainable growth.” Investors stress that clear and stable regulations are critical for effective decision-making, enabling them to manage risks, seize opportunities, and support Europe’s transition to a net-zero economy.
Call for Targeted Refinements, Not Overhaul
Instead of sweeping changes, investors advocate for targeted refinements focused on improving technical standards and aligning regulations with international reporting norms. Nathan Fabian, Chief Sustainable Systems Officer at PRI, noted that significant changes during the implementation phase could delay economic transitions and make it harder for stakeholders to communicate clearly.
Proposed refinements include streamlining technical standards, providing sector-specific guidance, and leveraging digital solutions to improve data accuracy. Investors also call for greater alignment between EU and global reporting standards to ensure coherence across regions.
Transparency and Progress Already Delivering Results
The statement also highlighted the positive impact of current sustainability reporting rules, noting that European companies are already reporting €440 billion in Taxonomy-aligned capital expenditure by 2024, with that figure expected to grow.
ESG leaders like Alexander Burr of Legal and General Investment Management stress that refining the technical standards would reinforce the EU’s leadership in sustainable finance and drive further investment in green initiatives.
Maintaining Stability for Sustainable Growth
Investors are urging the EU to maintain a stable and predictable regulatory environment, crucial for financing the energy transition and managing sustainability risks. Héléna Charier of La Banque Postale Asset Management reiterated that corporate sustainability disclosure rules are essential to efficiently allocate capital to the most sustainable companies, fostering long-term growth.
The investor-backed call for regulatory stability has been shared with Commission President Ursula von der Leyen and key EU policymakers, advocating for an unaltered and robust framework to ensure Europe’s competitive edge in the global transition to sustainability.
