Reclaim Finance

Reclaim Finance notes the relevance of the recommendations published by the Platform on Sustainable Finance in the report "Advancing sustainable finance: Technical criteria for new activities & first review of the Climate Delegated Act" (April 2025).

The proposed revisions introduce flexibility through various reliefs, but these risk undermining the quality, comparability, and usefulness of sustainability reporting. By allowing companies to omit or approximate material information, the changes are likely to increase divergence in practices while adding unnecessary complexity for both preparers and users.

The Sustainable Finance Disclosure Regulation (SFDR) adopted in 2019 triggered a vast movement of self labelling by asset managers. Intended as a classification that would put some order in the European Union sustainable funds market, SFDRs articles 8 and 9 quickly became a source of confusion.

The Sustainable Finance Disclosure Regulation (SFDR) adopted in 2019 triggered a vast movement of self-labelling by asset managers. SFDRs articles 8 and 9 quickly became a source of confusion, notably due to the lack of clear criteria for each category. Category assignments were regularly modified without justification by asset managers depending on internal assessments of compliance risk.

Reclaim Finance notes that the proposal includes some very positive element: 1) The extension of the scope of the Directive to include all large companies - listed and non-listed. 2) A requirement to develop European sector specific mandatory sustainability reporting standards. 3) The confirmation of the principle of “double materiality”.

Reclaim Finance warns the EU Commission about the potential risks that any significant cut in EU reporting requirements related to climate and the environment could trigger. The NGO urges the Commission to ensure that: 1) No further cuts are made to the ESRS requirements: The Commission decided to weaken the CSRD framework by making reporting conditional to a materiality assessment and making specific data points…

The proposed initiative on the competitiveness in the single banking market is largely influenced by the idea that lower capital requirements and prudential obligations would increase bank competitiveness and - in turn - benefit the EU economy. Yet, research shows that there is no evidence that higher capital buffers lead to structural restrictions on lending.

Reclaim Finance warns the Commission against calls to lower the regulatory requirements on the banking sector. Indeed, some EU banks and their representative bodies use the current focus on competitiveness and simplification to demand lower regulatory obligations, including reduced capital requirements. Yet, as the enclosed note summarizes, the arguments used to justify these demands are often misleading.

If the European Commission wants to improve the daily lives of European Citizens, the priority should be to protect them and not to focus on alleged "red tape" at the expense of their safety and wellbeing. The current deregulation drive severely weakens - if not erases - key protections for social and environmental rights, necessary to ensure a fair and sustainable future.

Reclaim Finance underlines that the Commission's proposal sidelines the key objective of Basel III - protecting financial stability and increasing the EU financial system's resilience - to integrate the demand of the financial industry to constrain capital requirement increases. Furthermore, the Commission fails to begin the integration of climate-related risks management into the prudential framework.

With the recent publication of a proposal on ESG ratings and sustainability risks in credit ratings, the European Commission aims to tackle the eagerly debated issue of the consistency, quality and usefulness of ESG ratings. Indeed, in the past few years, a consensus has emerged on the need to better regulate ESG ratings .

Regarding the proposal, Reclaim Finance underlines that: 1) The development and adoption of sector-specific standards for high impact sectors must be prioritised in order to provide clarity for companies in these industries on what must be reported for their particular risks and impacts.

The text clarifies that, "within the prudent person principle, PEPP providers shall take into account risks related to and the potential long-term impact of investment decisions on ESG factors". We welcome the explicit inclusion of ESG risk in the prudent person principle. We stress the relevance of the requirements for PEPP providers to consider the long-term impact of their investment.

The text clarifies that, "within the prudent person principle, IORPs shall take into account sustainability risks, as defined in Article 2, point (22), of Regulation (EU) Council 2019/2088 and of the European Parliament in their investment decisions".