Newly proposed standards for sustainability reporting by European corporates represent an “absolute minimum to meet investors’ needs”, according to Eurosif, the European Sustainable Investment Forum.

The pan-European association said the European Commission should accept the current proposals, published by an advisory body on 3 December, warning that “cutting too deeply risks weakening Europe’s leadership on transparent and reliable sustainability reporting”.

The European Financial Reporting Advisory Group (EFRAG) published its advice on simplified European Sustainability Reporting Standards (ESRS) to support efforts to “substantially” reduce the number of data points, clarify provisions, improve consistency with EU legislation, simplify structure and enhance interoperability with global sustainability reporting frameworks.

The commission requested the simplification as part of its sustainability omnibus package, designed to streamline the Corporate Sustainability Reporting Directive, the Corporate Sustainability Due Diligence Directive and related legislation.

Despite preserving “critical information” for investors such as climate and biodiversity transition plans, Eurosif said the revised ESRS – which represent a 61% reduction in data points – removed “some essential disclosures” including climate scenario analysis and detailed exposures to physical and transition climate risks.

Eurosif also warned against “extensive” reliefs granted to preparers on cross-cutting disclosures which means they would not need to establish timelines for full compliance. “This risks turning these reliefs into common practice rather than exceptional measures and undermines the credibility and comparability of reports for investors,” it said.

The European Commission is due consider EFRAG’s advice before adopting the delegated acts for the omnibus package, which are expected in mid-2026. Eurosif urges the commission should “swiftly adopt” the revised acts, adding that further cuts in data points, or new exemptions, would “undermine the relevance of the ESRS and their usability for investors”.

British politicians were urged to accelerate the country’s clean energy transition by a group of leading academics and experts highlighting the risks of delay and the financial benefits of rapid action.

Economist Angela Francis, Director of Policy Solutions at WWF-UK, argued against slowing down the pace of energy transition on grounds of affordability.

“Delaying ‘until you can afford it’ assumes cost won’t increase or it will be cheaper later – that’s not true,” she asserted.

Francis drew on research from the Institute for New Economic Thinking at the University of Oxford’s Oxford Martin School, which found that a fast transition would generate twice the savings of a slow adoption of cleaner energy. “Learning by doing delivers major savings,” she noted. “And faster is cheaper.”

Francis was one of ten speakers who addressed an audience of UK parliamentarians and other invited guests as part of a ‘National Emergency Briefing’ on climate and nature crises, held in London on 27 November.

Francis said the migration to net zero energy sources was being delayed by prevailing market rules and resistance from vested interests. She urged the acceleration of regulatory changes to better account for the environmental impact of consumption and production, such as disclosure rules.

“We have done some of that already, but not enough and we are currently in danger of rolling back,” she said. “We need to consistently reward the businesses that are doing the work to be competitive in a new world where success includes – lowering carbon, restoring soils, keeping forests standing, circular use of resources and less waste – all things that add to our resilience.”

The European Parliament recently voted in favour of a package of measures to reduce sustainability disclosure requirements on corporates, which would also reduce transparency on environmental and social risks and impacts to investors. The UK government is currently consulting on proposals to introduce transition planning requirements for large corporates and financial institutions.

Citing a “positive link” between environmental reporting and company returns, Francis said that under prevailing rules firms that disclosed and managed their carbon footprint often suffered a dip in financial performance before seeing longer-term performance benefits.

“Those companies are doing extra work to lower their environmental impact and restore what we have lost. They have to invest, they have to pay for extra reporting and certification and either have to beat the opposition on price or trade in the 10-20% of the market that will pay a premium,” she added, urging politicians to “change the rules to get better outcomes when there are obvious market failures”.

Revised European rules for sustainable funds leave “room for greenwashing” due to weak basic criteria, limited exclusions and an absence of engagement-related requirements in its new category for ‘transition’ investment vehicles. 

Eurosif, which represents domestic European sustainable investment fora, said the European Commission’s proposed changes to the Sustainable Finance Disclosure Regulation (SFDR), laid the foundation for a more “fit-for-purpose framework” than the framework introduced in 2021.

But it said the removal of entity-level disclosures on principal adverse impacts and reduction in product-level disclosures could “further reduce comparability for investors”. Further, the lack of mandatory engagement-related requirements for the SFDR’s proposed new transition category “fails to incentivise meaningful decarbonisation efforts among investee companies”. 

The commission’s review of SFDR is aimed at providing greater clarity for investors and simplifying requirements for suppliers, partly by replacing disclosure requirements with product categories for ‘ESG basics’, ‘sustainable’, and ‘transition’ funds. Funds in the sustainable and transition categories must invest a minimum 70% in assets that contribute positively to their stated objectives. 

The commission’s proposals differ from a draft leaked two weeks ago which allowed alternative investment funds marketed only to professional investors to opt out of SFDR. 

The change of approach could force providers to curtail meaningful sustainability disclosures or “fundamentally restructure products to fit rigid new categories”, said Phil Bartram, Partner at Travers Smith. “Such a move is likely to drive a ‘herding’ effect into the least demanding category, undermining differentiation and innovation.”

Although the proposals are subject to revision and amendment by the EU co-legislators – the European Parliament and Council of the EU – providers of ‘green funds’ are expected to review existing Article 8 and 9 funds rapidly and map them to the new SFDR categories to minimise disruption and maintain client confidence.

“Asset managers face non-negligible transition costs as they reclassify funds, analyse portfolios and adapt internal processes. And while the new categories set clearer expectations, there is still a large element of subjectivity,” said Tom Willman, Regulatory Lead at data provider Clarity AI. “It remains to be seen how far they will go in protecting consumers and reducing greenwashing.”