Time to Shake Up Sustainability Regulations, Says BDI
Advocates Push for Deregulation of Sustainability Standards
The German Federation of Industries (BDI) is advocating for a fresh perspective on sustainability regulation. In their latest position paper, they argue for a more practical, market-driven approach to these policies.
The Call for Change in Berlin
Following similar calls from the Association of German Banks (BdB), the BDI is pushing for a paradigm shift in how we approach ecological transformation. As stated in their upcoming paper, set for publication soon and already available to Börsen-Zeitung, the BDI contends that the real economy should spearhead the ecological transformation.
The BDI criticizes the current sustainability regulations as a hindrance rather than a help. They claim that the financial sector's capital allocation function, while well-intentioned, is too ineffective and expensive due to overly complex and extensive regulations.
CEO Tanja Gönner Sounds the Alarm
Gönner, the BDI's CEO, demands immediate action from the future federal government. She insists that politics need to drastically alter their approach to the ecological transformation. In her talks with Börsen-Zeitung, Gönner stressed the need for a shift from ineffective financial regulations to solutions that balance economy and climate policy.
Companies, according to Gönner, require more public investment in infrastructure, stronger risk reduction measures through economic policy, support from the banking sector, and increased risk capital.
Targeting Impactful Initiatives
BDI's position paper also zeroes in on specific initiatives for change. They advocate for significant reduction of the Corporate Sustainability Reporting Directive (CSRD), voluntary application of the EU taxonomy, and transformation plans that serve as mere guidelines. The BDI also calls for solutions to the challenges of ESG ratings.
Regarding the implementation of CSRD in national law, postponed by the traffic light coalition, Gönner suggests a swift and practical approach after the federal election to provide businesses with legal certainty. To prevent disadvantages for German companies, Gönner proposes restrictions on sanctions in the first year of application and the involvement of independent third parties in the review process.
Taking Aim at Overbearing Financial Micromanagement
The BDI takes issue with what they perceive as micromanagement attempts through financial markets. According to their assessment, the effectiveness of additional capital flow guidance through green financial instruments and regulations is often low—too complex and too expensive.
Moving forward, the BDI urges politics in Berlin and Brussels to prioritize real economy-based, market-driven solutions over politically driven and excessive financial market micromanagement. Support for the transformation should come through more infrastructure investments, especially in the power or hydrogen grid.
Examining Corporate Financing Challenges
The BDI points out that challenges in the transformation mainly arise when business models are affected by politically driven price increases, new technologies, or high initial investments.
For BDI, fundamental financial feasibility through internal financing and supplemental loans should be prioritized for all companies investing in ecological initiatives. Currently, financing advantages for sustainable investments are limited, according to the BDI.
The Role of Auditors Under Scrutiny
The BDI also raises concerns about the stronger role of auditors due to sustainability regulation and criticizes a lack of uniformity, both domestically and in comparison to the EU. Establishing a uniform EU auditing standard could potentially address this issue.
As the BDI continues to lobby for changes in sustainability policies, their aim is to reduce regulatory complexity, foster competitiveness of German industries, and ensure a market-driven approach to sustainability investments.
- The German Federation of Industries (BDI) advises a fresh perspective on sustainability regulation, advocating for a more practical, market-driven approach in their latest position paper.
- The BDI contends that the financial sector's capital allocation function is too ineffective and expensive due to overly complex and extensive regulations, criticizing current sustainability regulations as a hindrance rather than a help.
- Gönner, the BDI's CEO, advocates for immediate action from the future federal government, insisting on a shift from ineffective financial regulations to solutions that balance economy and climate policy.
- BDI's position paper targets specific initiatives for change, such as advocating for a significant reduction of the Corporate Sustainability Reporting Directive (CSRD), voluntary application of the EU taxonomy, and transformation plans that serve as mere guidelines.
- The BDI urges politics in Berlin and Brussels to prioritize real economy-based, market-driven solutions over politically driven and excessive financial market micromanagement, emphasizing the need for more infrastructure investments, especially in the power or hydrogen grid.
