Economy

European “green” reporting risks turning into a farce

The EIB – European Investment Bank – fears a “reputational disaster” following the introduction of the new European rules for reporting “green” investments. From this year, in fact, the Directive on sustainability reporting comes into force, which obliges large companies to report on their environmental, social and governance sustainability, the so-called ESG factors. The directive will also have a significant impact on small and medium-sized companies. In fact, large companies will soon pass on reporting obligations to their supply chain. The President of the European Central Bank Christine Lagarde herself recognized this in a recent interview in which, while declaring herself in agreement with the direction to follow, she highlighted the need to harmonize and rationalize the bureaucratic burden on businesses which she defined as “enormous” ( massive).The rules are so stringent that the European Investment Bank would find itself declaring a “Green Asset Ratio” – in practice the weight of “green” assets on total ones – equal to a paltry 1%. Practically nothing. The EIB is the largest multilateral credit institution in the world for ongoing investments, as well as one of the main economic policy instruments of the European Union. A bank of great sophistication and resources. In recent years, presumably following the strategies and indications of the European institutions, it has modified its investment policies, gradually eliminating all investments in fossil fuels from its enormous portfolio, which exceeds 500 billion euro. It did so with such determination that at a certain point the EIB proudly defined itself as “the climate bank”. According to one of its internal metrics called “Climate Action Ratio”, it believed it was investing more than 50% of its balance sheet assets in “green” projects. Last year, the bank said it had committed 44.3 billion euros to projects deemed climate-friendly, equal to 60% of loans granted. The discrepancy between 1% of European metrics and the declared 50% is abysmal. until yesterday. One of two things: either the EIB in recent years has not understood the direction in which Europe was asking it to go, or it has understood it, but has been unable to do anything to achieve and respect the required standards. And if not even the Bank of European Institutions itself has managed to understand or do, imagine what critical issues and difficulties have been imposed on the European production system. An EIB spokesperson declared that the institute is collaborating with the European Commission to “recalibrate” the green reporting rules, reduce bureaucracy and ensure that these incentivize all sustainable investment. It’s good that they are doing this. Not even the most important European institutions apparently manage to fully understand and respect the standards imposed by the European Union. Let’s hope that at least the EIB will be able to achieve a change. The privilege of being able to obtain more balanced rules should, however, be guaranteed not only to the very large financial institutions based in Brussels, but also to the rest of European manufacturing, increasingly crushed by the weight of bureaucracy.