The EU group made key recommendations to place sustainability at the heart of Europe’s financial system, including the development of an EU-wide taxonomy for sustainable finance. A sustainable model of development is regarded as vital to the long-term prosperity of the EU economy.
According its own communication, the Commission will now move to finalise its strategy on sustainable finance on the basis of these recommendations. Delivering an EU strategy on sustainable finance is a priority action of the Commission’s Capital Markets Union (CMU) Action Plan, as well as one of the key steps towards implementing the historic Paris Agreement and the EU’s Agenda for sustainable development. To achieve the EU’s 2030 targets agreed in Paris, including a 40% cut in greenhouse gas emissions, we need around €180 billion of additional investments a year.The financial sector has a key role to play in reaching those goals, as large amounts of private capital could be mobilised towards such sustainable investments. The Commission is determined to lead the global work in this area and help sustainability-conscious investors to choose suitable projects and companies.
Valdis Dombrovskis, Vice-President responsible for Financial Stability, Financial Services and Capital Markets Union said: “The signature of the Paris agreement in 2015 marked a milestone for the world and for the global economy. We are now moving towards a low-carbon society, where renewable energy and smart technologies improve our quality of life, spurring job creation and growth, without damaging our planet. Finance has a big role to play in funding a sustainable future. I welcome the outstanding work of the HLEG which is excellent input for our upcoming strategy.”
Jyrki Katainen, Vice-President responsible for Jobs, Growth, Investment and Competitiveness said: “The EU is already at the forefront of investing in resource efficiency and social infrastructure, not least through the European Fund for Strategic Investments and its reinforced focus on climate action. At the same time, creating an enabling framework for private investors is crucial to achieving the transition to a cleaner, more resource-efficient, circular economy. The HLEG’s final report provides us with a roadmap to do just that and we welcome their invaluable contribution to this very important issue.”
The final report by the High-Level Expert Group maps out the challenges and opportunities that the EU faces in developing a sustainable finance policy. It identifies ways in which the financial sector can re-connect with the real economy to support the transition to a more resource-efficient and more circular economy. The group argues that reorienting investment flows into long-term, sustainable projects will also improve the stability of the financial system.
The report proposes:
- a classification system, or ‘taxonomy’, to provide market clarity on what is ‘sustainable’
- clarifying the duties of investors’ when it comes to achieving a more sustainable financial system
- improving disclosure by financial institutions and companies on how sustainability is factored into their decision-making
- an EU-wide label for green investment funds
- making sustainability part of the mandates of the European Supervisory Authorities (ESAs)
- a European standard for green bonds.
The group’s report will form the basis of the Commission’s comprehensive Action Plan on sustainable finance that it will put forward in the coming weeks. Both the findings of the report and the Commission’s Action Plan will be discussed at a high-level conference on 22 March 2018 in Brussels.
The author of this article is solely responsible for the content published.