A leaked email from senior management within the European Investment Bank (EIB) has warned that new EU green reporting requirements this year could seriously damage the bank’s climate-friendly credentials.

The FT has reported it has seen the leaked email from EIB’s head of operations Jean-Christophe Laloux, which was sent to colleagues.

The paper says the email “warned of a “major reputational risk” to the bank from new EU sustainable reporting rules, which this year require a taxonomy classifying green investments.”

According to the paper: “The reporting reforms would force the bank to declare a “Green Asset Ratio” – an EU standard intended to show the proportion of a bank’s assets considered climate-friendly – of “around 1 per cent”, compared with its current “Climate Action ratio” based on EIB-defined metrics that stands “above 50 per cent.”

In January 2023, the European Commission introduced the Corporate Sustainability Reporting Directive (CSRD), aimed at modernising and strengthening the “rules concerning the social and environmental information that companies have to report.”

Firms that have been placed in the first category of reporting requirements had to apply the new rules during the 2024 financial year, and the reports are set to be published this year.

Complex rule book

The European Commission says the new rules are aimed at ensuring “that investors and other stakeholders have access to the information they need to assess the impact of companies on people and the environment.”

But there are growing concerns about the complex nature of the rules and reporting requirements, both from EU governments as well as financial bodies.

Laloux echoes the same concerns in the leaked email and suggests that the bank should “postpone the compliance timeline,” and speak to the European Commission about necessary changes to the regulation.

Senior leaders from a number of banks have already written to the commission and warned that further data collection requirements imposed on their clients could lead to a reporting burden. the FT has said.

Concerns around reputational damage have surfaced at a time the EIB is coming under growing criticism from campaigners as well as current and former employees for allegedly caring more about its reputation than the environmental impact of its operations.

Need for consolidation

The European Commission seems to be willing to respond to the growing concerns by governments and financial bodies around sustainability reporting, and has promised to take necessary steps this year.

Last November, President Ursula von der Leyen indicated that certain current and future ESG reporting requirements could be consolidated into one “omnibus” regulation.

The plan is to combine the reporting reporting requirements in the Corporate Sustainability Reporting Directive (CSRD), EU Taxonomy Regulation, and Corporate Sustainability Due Diligence Directive to avoid overlap and “reduce bureaucracy”.

Last year, the European Commission agreed to the ‘Budapest Declaration‘ with EU heads of state. As part of that declaration, the Commission is expected to reduce sustainability reporting requirements by at least 25% in the first half of 2025.

The declaration also calls for “a simplification revolution” for existing regulatory frameworks to make life easier for business in the EU.