“Today, the risk for Europe is not the energy transition itself, but any delay in that transition,” says Nathalie Dogniez, president of Eurosif. “For a long time, some people pitted profitability against sustainability, viewing the latter as a cost or a constraint. We now realise that it is both an economic issue and a matter of sovereignty. It has become a strategic issue that can no longer be ignored.”
A transition that is more necessary than ever
Against a backdrop of geopolitical tensions, energy uncertainties and challenges relating to strategic autonomy, this issue now extends far beyond the climate agenda. For Nathalie Dogniez, European economic sovereignty depends directly on its ability to accelerate its energy transition. “If it wants to remain competitive and sovereign, Europe has no choice,” she concludes.
This conviction is also underpinned by increasingly well-documented economic realities. The cost of inaction now appears to be far greater than the investment required to support the transition. Nathalie Dogniez cites, in particular, several studies showing that investment in climate adaptation generates significant long-term economic benefits. “Investing 1% of GDP in climate adaptation would prevent 10 to 15% of economic losses over the coming century,” she explains. “The return on investment is considerable.”
Finance as a driver of the transition
Finance plays a central role in this transformation. The investment required to fund infrastructure, technology and transition projects is substantial. To mobilise these funds effectively, investors need a clear framework and reliable data.
“In particular, investors need reliable, comparable and standardised data to be able to invest in the transition,” insists Nathalie Dogniez. “Without relevant data, we’re moving forward blind.”
It was notably in response to these expectations that the European Union distinguished itself with an ambitious regulatory framework. The Green Taxonomy, SFDR, CSRD and CSDDD were designed to create greater transparency and enable better allocation of capital towards activities compatible with transition objectives. The approach went far beyond a purely ESG-based approach. “Even an investor with a purely financial objective must now factor transition risks into their decisions,” comments Nathalie Dogniez. “Lacking data on a company’s transition trajectory represents a major risk in the medium and long term.”
The publication of non-financial information should therefore not be seen merely as a regulatory requirement. It is becoming a genuine strategic management tool.
Omnibus: between simplification and strategic retreat
However, the Omnibus Directive, which aims to ease regulatory constraints, risks undermining this momentum. Whilst the president of Eurosif acknowledges the need to simplify certain mechanisms deemed too complex, she nevertheless believes that Europe has gone too far and is undermining the ambitions it has set itself in this area.
In particular, the directive provides for a significant reduction in the number of companies subject to non-financial reporting requirements, as well as a substantial relaxation of the requirements relating to transition plans.
“To say that reporting is merely a cost is an extremely simplistic view. Many companies that are no longer required to publish reports have decided to continue doing so voluntarily, because they see it as a useful exercise for managing their transition and risks. We must not confuse simplification with deregulation.”
Don’t slow down – speed up
The European reporting standards, the ESRS, may indeed have required certain operational adjustments. But for the president of Eurosif, the response provided by Omnibus goes far beyond this logic of technical simplification. “One sometimes gets the impression that we’ve thrown the baby out with the bathwater,” explains Nathalie Dogniez. “The directive reduces the scope of non-financial reporting by more than 90%. And, crucially, the requirement for very large companies to implement a transition plan has been removed. Here, we are no longer talking about simplification, but about a watering down of European ambitions.”
Not only is this setback likely to slow down the transition – when we should, on the contrary, be speeding it up – but it also creates greater uncertainty for investors. “Markets need consistency and visibility. If we create uncertainty, we create risk,” comments Nathalie Dogniez.
Luxembourg, a hub for sustainable finance
Within this European landscape, Luxembourg occupies a unique position. In recent years, the Grand Duchy has established itself as one of the leading international centres for sustainable finance. “One in three euros invested in sustainable finance now passes through Luxembourg,” notes Nathalie Dogniez. “And over 71% of assets in Luxembourg funds are SFDR-compliant. Here, sustainability is no longer a niche: it has become the market standard.”
In her view, this lead is down to a rare alignment between the various players in the ecosystem: regulators, the financial industry, market infrastructure providers and specialist initiatives. “Luxembourg doesn’t just follow European regulations: it puts them into practice for the market,” says Nathalie Dogniez.
At a time when some are questioning Europe’s ambition in the area of sustainability, this ability to turn regulatory complexity into a competitive advantage could become a major strategic asset for Luxembourg’s financial centre.