Investors Warn Omnibus Package Could Weaken EU Sustainability Disclosures
More than 200 financial sector actors, including 162 asset owners and asset managers with a combined €6.6tn assets under management, have signed a joint statement calling on the EU Commission to “preserve the integrity and ambition” of the EU’s sustainable finance framework.
Investors with a combined €6.6tn in assets under management have urged the European Commission to “preserve the integrity and ambition” of the EU’s sustainable finance framework. The move comes amid alarm that the EU Commission’s upcoming Omnibus package, expected on 26th February 2025, could lead to the wholesale revision of key sustainability requirements.
A joint statement published by three leading European investor membership bodies - European Sustainable Investment Forum (Eurosif), The Institutional Investors Group on Climate Change (IIGCC) and the Principles for Responsible Investment (PRI) - and supported by more than 200 investors and other financial sector actors, warns that “reopening these regulations in their entirety risks creating regulatory uncertainty and could ultimately jeopardise the Commission’s goal to reorient capital in support of the European Green Deal.”
The Omnibus package purports to enhance Europe's competitiveness and streamline regulations, with key sustainability laws including the EU Taxonomy, the Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD), expected to be revised.
However, investors say 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. This is because, as the statement argues, 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.”
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.
Signatories “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 provide clear implementation guidance.”
In their statement, investors say the increased transparency created by these regulations is already having a positive impact, highlighting evidence that by 2024, European companies had reported €440bn of Taxonomy-aligned capital expenditure - a figure expected to grow significantly.
With the EU facing an estimated annual investment gap of €750-800bn per year, investors warn that initiatives like the forthcoming Clean Industrial Deal which aim to “ensure the long-term competitiveness of Europe's net-zero industry and its economic resilience” could be undermined if sustainability reporting standards slide.
The intervention, which has been 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 [investor] decisions.”
Investors propose a targeted approach to refine the framework, including;
- Streamlining technical standards based on industry feedback
- Providing clear implementation guidance, including sector-specific advice where relevant
- Ensuring interoperability between European and international reporting standards
- Leveraging digital solutions to reduce reporting burdens and improve data harmonisation
Stephanie Pfeifer, Chief Executive Officer at Institutional Investors Group on Climate Change (IIGCC), said, “By maintaining the core principles of these regulations while addressing implementation challenges, the EU can reinforce its global leadership in sustainable finance. Timely access to high-quality and comparable reporting from the real economy is a prerequisite to inform and guide investor decisions, enabling this balanced approach to support the reorientation of capital towards a more competitive, equitable, and prosperous net zero economy, bridging the estimated annual investment gap of $750-800bn.”
Aleksandra Palinska, Executive Director at the European Sustainable Investment Forum (Eurosif), said, “For the EU to reach its industrial decarbonisation and competitiveness objectives, the Draghi report identifies an annual investment gap of €800bn. Private capital is needed to bridge this gap. To play their role, investors need quality, reliable and comparable corporate disclosures, including on sustainability risks and impacts. 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. Instead, the focus should be on supporting companies to implement the rules effectively, and if necessary targeted adjustments of rules at the technical level.”
Nathan Fabian, Chief Sustainable Systems Officer at Principles for Responsible Investment (PRI), said, “Europe will need finance and corporate sectors to work together to meet economic competitiveness, climate, and nature goals. Wholesale changes to key sustainable finance tools and frameworks during their implementation creates uncertainty in the market and risks undermining the ability of economic actors to communicate clearly, setting back economic transition. Undoing the progress made is not in the interests of investors either. Investors would benefit from increased consistency of the framework, but sustainability information is essential to investors’ confidence and allocation decisions. The objectives and integrity of the sustainable finance framework must be maintained.”
ENDS
On 28-29 April, Climate Action will host its inaugural Nature Finance Forum Europe (NFF-EU), co-located alongside the 8th annual edition of the Sustainable Investment Forum Europe (SINV-EU), convened in partnership with UNEP Finance Initiative.
NFF-EU will catalyse capital flows to nature markets and projects by bringing institutional investors together with specialist nature funds, corporations and project operators developing investable, nature-regenerative solutions.
SINV-EU provides the platform for sustainable finance leaders dedicated to advancing a net-zero, nature-positive, and equitable economy. The Forum will emphasise the critical need to mobilise and align financial resources within Europe’s sustainable finance ecosystem, facilitating a just transition in support of both Europe’s sustainability objectives and the overarching goals of COP30.
Emily Murrell, Policy Director at IIGCC, will be joined by Olga Hancock, Head of Responsible Investment at Church Commissioners for England, and Jan Kaeraa Ramussen, Head of ESG & Sustainability at PensionDanmark, for a sustainable investment dialogue on aligning european and global climate achievements with investor expectations.
Peter Paul van de Wijs, Chief Policy Officer of the Global Reporting Initiative (GRI), and Daniel Bouzas Luis, Regional Lead for Europe at UNEP-FI, will dive into the challenges in aligning voluntary standards such as Taskforce on Nature-related Financial Disclosures (TNFD) with mandatory EU frameworks including CSDR.
The full agendas can be viewed here:
