A letter to the European Commission from investors managing €6.6 trillion in assets arrives just three weeks before the presentation of the Omnibus simplification package. Brussels is considering major revisions to CSRD, CSDDD, and the EU Taxonomy, raising concerns among financial leaders.
Europe must resist the anti-ESG backlash that has gained traction in the United States. As it prepares the Omnibus simplification package, set to be unveiled on February 26, the European Commission must prioritize regulatory stability and avoid creating uncertainty that could do more harm than good. CSRD, CSDDD, and the EU Taxonomy are fundamental tools that should not be called into question—doing so would jeopardize the Green Deal’s objectives.
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A financial sector outcry against ESG rollbacks
This is the message delivered to Brussels in an open letter signed by over 200 financial industry leaders, including 162 asset owners and investment managers collectively overseeing €6.6 trillion in assets.
The appeal comes as pressure mounts to weaken ESG regulations. Several EU countries and segments of the business community are pushing for significant revisions to the ESG framework established in the previous legislative cycle. The underlying goal—now less concealed—is to scale back overall sustainability ambitions.
Why weakening ESG regulations is a bad idea
For the group of investors, led by the Institutional Investors Group on Climate Change (IIGCC), the European Sustainable Investment Forum (Eurosif), and the Principles for Responsible Investment (PRI), revising the ESG framework would be a self-defeating move. Here’s why.
Eroding ESG regulations would undermine the reliability of critical data. The existing framework provides high-quality, standardized information essential for both investors and businesses to make informed investment decisions. The EU’s new ESG architecture is key to closing the investment gap necessary to meet climate and industrial goals. To stay on track, the EU needs to attract €750-800 billion in private investments annually.
Additionally, reopening established regulations would create further uncertainty and disrupt consistency across financial frameworks. CSRD and the EU Taxonomy, for example, are closely linked to other financial regulations, such as SFDR and MiFID II. Altering these rules would trigger a cascade of unintended negative effects, the letter warns.
ESG benefits are already visible
Investors argue that the benefits of ESG regulations are already evident. Studies show that current policies are improving transparency and positively influencing markets. “By 2024, European companies had already reported €440 billion in capital expenditures aligned with the EU Taxonomy, a figure expected to grow significantly in the coming years,” the letter states.
Instead of weakening the regulatory framework, the Omnibus package should focus on refining technical standards and enhancing coherence across ESG regulations. However, investors caution against reopening the entire regulatory structure. The package should also provide clearer industry-specific guidelines, including sectoral Q&As, to help companies comply with ESG requirements.
The message from investors is clear: regulatory stability is essential to achieving climate goals and maintaining market confidence. A rollback of ESG regulations would be a step in the wrong direction.
