German Industry Association Advocates for Loosening Eco-Friendly Regulation Standards
In an unexpected move, the Federation of German Industries (BDI) has joined the Association of German Banks (BdB) in demanding fundamental changes to sustainability legislation. A new policy paper by BDI says it's time for a "revamped political strategy" when it comes to eco-transformation.
BDI Chief Executive Tanja Göhnner urges the next German government to take the lead in calling for a major overhaul of the sustainable finance framework in Brussels. Speaking to Börsen-Zeitung, she stated, "Politicians must shift their approach to eco-transformation, focusing on practical economic and climate policy solutions instead of costly, ineffective financial policy regulations."
German companies, Göhnner believes, need increased public investment in infrastructure, risk reductions through economic policy measures, strong banking sector support, and more venture capital.
Göhnner labels the Corporate Sustainability Reporting Directive (CSRD) as "far too complex". According to Göhnner, the CSRD should be pared down significantly, the EU taxonomy should only be applied voluntarily, transformation plans should be seen as "general signposts", and issues surrounding ESG ratings should be resolved.
After the federal elections, Göhnner suggests swift and practical transposition of the CSRD into national law to provide the economy with legal certainty. To prevent German companies from facing unnecessary competitive disadvantages, she recommends limitations on sanctions during the first year of application and the inclusion of independent third parties in review panels.
Criticizing "small-scale attempts to control through financial markets," the BDI calls for fewer politically driven interventions via the financial markets and more market-based, real-economy solutions. Infrastructure funding, such as investment in the electricity or hydrogen network, should be increased to support the transformation.
The BDI also recommends scrutinizing the current challenges faced by corporations during the transformation. The majority of these issues, the BDI states, arise when businesses adapt to politically induced increases in the costs of crucial input factors, market-ready new technologies, or high initial investments.
For corporations and their eco-investments to thrive, financing should be primarily sourced internally, with loans supplementing internal funding. Financing advantages for sustainable investments, according to the BDI, are currently limited.
Regarding increased auditor roles due to sustainability regulations, the BDI points out the lack of uniformity, both within Germany and across Europe. An EU auditing standard, the BDI suggests, could help alleviate this issue.
Typically, the BDI advocates for reforms that promote competitiveness, clarity, and predictability in sustainability regulations. They often push for logically structured reporting standards, reduced bureaucratic barriers, and support for sustainability innovation. Similar stances can be found among other major German and EU business organizations, as they strive for effective and efficient sustainability regulations.
The Federation of German Industries (BDI) and the Association of German Banks (BdB) jointly advocate for fundamental changes to sustainability legislation, with BDI CEO Tanja Göhnner urging a revamped political strategy for eco-transformation. Göhnner advocates for the next German government to focus on practical economic and climate policy solutions in the finance industry, encouraging increased public investment, risk reductions, banking sector support, and more venture capital for business.
