Investors Urge EU To Keep Green Rules In Face Of Trump Turmoil

More than 200 investor groups and financial institutions managing a total of $6.8 trillion in assets have urged the EU not to water down green finance rules, making the case that Europe’s sustainability regulations provide a stabilizing counterweight to the unpredictability of the regime of returning U.S. President Donald Trump.

In a joint statement delivered Tuesday, the investors called on the European Commission to “preserve the integrity and ambition” of the EU’s sustainable finance regulations. Far from making Europe uncompetitive, the signatories said, the current rules helped offer long-term stability in an increasingly uncertain global economic climate.

“Pursuing climate action and economic growth in tandem is not just possible, but necessary,” Stephanie Pfeifer, CEO for the Institutional Investors Group on Climate Change, told me. “If the EU can showcase it is committed to these principles, it will give investors and companies the confidence to invest for the long-term in the technologies, companies and sectors that will drive both economic growth and decarbonization.”

“Climate solutions and the transition of key sectors of the economy represent one of the biggest investment opportunities of the 21st century,” Pfeifer added, saying that such investments would “help to wean Europe off its dependency on fossil fuel and power tomorrow’s economy with cheap, reliable and sustainable energy.”

The warning from investors is the latest in a series of responses to a November announcement by the European Commission President, Ursula von der Leyen, that the bloc was seeking to “streamline” the financial reporting requirements built into the EU’s Green Deal laws. At that time, more than 50 major companies, including IKEA, H&M and Nestlé issued an open letter to the EU, urging that it “stay committed to protecting and restoring nature and biodiversity, and combatting climate change.”

European business lobby groups and some European political powers, including the government of France, have been calling on the European Commission to weaken sustainability reporting rules. Writing on social media platform X last month, French European affairs minister Benjamin Haddad wrote: “Our companies need simplification, not additional administrative burdens.”

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Speculation that the European Commission could try to weaken EU financial reporting requirements has intensified since Trump’s return to the White House, where he has undertaken a program of systematically censoring language around climate change, sustainability and human rights across the new administration. At the same time, Trump’s incoming sweeping tariffs, targeting neighboring countries Canada and Mexico, as well as the EU bloc, have thrown global markets into turmoil.

But Aleksandra Palinska, executive director at the European Sustainable Investment Forum said such uncertainty only served to strengthen the case for strong green finance rules. Highlighting the 2024 Draghi report, which identified an $825 billion funding gap for Europe to achieve its industrial decarbonization and competitiveness objectives, Palinska said: “To play their role, investors need quality, reliable and comparable corporate disclosures, including on sustainability risks and impacts. Sweeping changes to these [green finance] rules, before they are fully implemented, will create regulatory uncertainty and are likely to hinder the contribution investors can make to sustainable growth.”

In earlier responses, François Gemenne, a professor at HEC Paris and a lead author of the Intergovernmental Panel on Climate Change’s sixth assessment report, told Sustainable Views magazine that “the best response to the policies implemented in the U.S. is to beef up the EU green agenda, not to weaken it. Rather than follow Trump’s way, we should design our own path.”

“The key to competitiveness is access to cheap and abundant energy,” Gemenne said. “We don’t have fossil fuels in Europe, and so we cannot ‘drill, baby, drill.’ But we can produce renewables and make energy prices go down.”