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Investors worth 6 trillion Euros warn EU against weakening green rules

Investors who manage assets worth 6.6 trillion euro have called on the European Union to not weaken sustainability rules as it plans to reduce red tape in green finance.

This month, the European Commission will release a proposal to simplify the reporting requirements for sustainability policies. Some businesses complained that they were too complex.

In a statement released on Tuesday, several investor groups, including the Institutional Investors Group on Climate Change (IIGCC), the European Sustainable Investment Forum, and Principles for Responsible Investment, warned that a complete reworking of rules could have a negative impact on the industries Europe is trying so hard to attract.

Investors including AXA Investment Managers, L&G Asset Management and others signed the statement.

The Commission intends to simplify EU corporate sustainability reporting regulations, due diligence rules (which require companies to verify human rights and environmental concerns in their supply chain) and a third strategy which classifies climate friendly investments.

This move is intended to counteract the promise of U.S. president Donald Trump to eliminate regulations and to respond to industry calls for a reduction in red tape.

EU officials have stated that the proposals will only include minor changes to reduce the reporting burden on small businesses. Some member states, such as Germany and France want the EU go further and to delay the implementation.

Leo Donnachie is a senior policy manager with the IIGCC. He said that losing information about companies' sustainability credentials can be a barrier for investment, as Europe competes against China and the U.S.

He said that "investors must have access to these information in order to make decisions."

Some industry players are not in agreement. Patricia Volhard of Debevoise & Plimpton, the head of European Funds Regulatory Practice at Debevoise & Plimpton, said that the current data requirements "are too much of a burden for the industry."

Mario Draghi, former European Central Bank Chief, has stated that the EU requires up to 800 billion euro in annual investment to keep up with economic rivals.

Donnachie said that Brussels should consider streamlining the technical aspects of sustainability rules but that delaying them or overhauling would create unwelcome instabilities. (Reporting and editing by Jan Strupczewski, Ros Russell and Virginia Furness)

(source: Reuters)