Investors With $6.8 Trillion Warn EU Not to Bow to ESG Backlash

Investors With .8 Trillion Warn EU Not to Bow to ESG Backlash

(Bloomberg) — A group of investors representing €6.6 trillion ($6.8 trillion) of assets is calling on European officials not to cave in to mounting pressure to scale back the bloc’s ESG regulations.

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The planned reporting rules are essential to help asset managers and owners identify where to allocate funds, according to the group, which consists of the Institutional Investors Group on Climate Change (IIGCC), the European Sustainable Investment Forum (Eurosif) and the Principles for Responsible Investment (PRI).

Any adjustments should be limited to technical standards and guidance on implementation, the group said on Tuesday. The alternative, namely reopening European environmental, social and governance requirements “in their entirety, risks creating regulatory uncertainty and could ultimately jeopardize” Europe’s goal of living up to its Green Deal, which is enshrined in law, the joint statement said.

The warning coincides with mounting pressure from Germany and France, the European Union’s two largest economies, to scale back planned ESG regulations on concerns the requirements are preventing companies in the bloc from competing freely with their peers in the US and Asia.

France called last month for a “massive” regulatory pause and urged EU officials to ensure that small and mid-sized companies aren’t unduly burdened by reporting rules. Germany wants the EU to delay the requirements, known as the Corporate Sustainability Reporting Directive, by two years and to water down several details.

French and German demands for a regulatory timeout come as both countries watch their output decline. Official figures published last month show that neither economy saw its gross domestic product increase in the final months of 2024, dragging down growth in the entire euro zone.

Describing their plea as an intervention, IIGCC, Eurosif and PRI said they’ve shared their concerns with EU Commission President Ursula von der Leyen and other “key” commissioners, to make sure investors operating in the bloc have “timely access to high-quality and comparable reporting” from companies, describing such data as “a prerequisite to inform and guide” investor decisions.

The lack of standardized, audited information has been an obstacle that investors have had to contend with for years. Pleas for reform led the EU to rewrite its rules for reporting non-financial information, including the introduction of CSRD.

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