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Investors warn EU against data reductions in green rule review

The political drive to reduce EU sustainability regulations should not result in investors losing valuable information about material risks, or forcing them to rely on third party data providers more often. This was the message from Europe's leading asset management trade association on Friday.

The European Commission is reviewing the planned rules for corporate disclosures, amid concerns that they are preventing European companies from competing against other regions. This is especially true in light of a tariff war driven by the United States.

The Commission has proposed changes in February that will exempt thousands of smaller European companies from the rules and reduce the obligations on larger firms to monitor their supply chains and check for environmental and human rights problems.

The European Fund Managers' Association, EFAMA said that it supported the Commission in its efforts to reduce regulatory burden, but warned against removing key information about sustainability risks, which could harm the EU's broader climate objectives.

Ilia Békou, policy adviser at EFAMA said that simplifying disclosure requirements can help EU competitiveness, by promoting innovation and growth in key technological areas across the EU's economy.

EFAMA's proposal stated that it was preparing a list of data points which companies could report. It estimated this would reduce the reporting requirements by 80%. This could be supplemented with additional voluntary disclosures.

The report also cautioned against reducing too much the number of green companies that are covered by the regulation, as this could make it more difficult for European investors and businesses to invest in smaller green enterprises.

Another suggestion is to ensure that the changes are in line with an upcoming review of sustainability reporting for asset managers. (Reporting and editing by Simon Jessop, Susan Fenton and Virginia Furness)

(source: Reuters)