Sustainable finance, 'la suite'?

ABBL Published 15.12.2020

As the von der Leyen Commission began its mandate a year ago, it announced as a political priority the European Green Deal: a plan to make the EU’s economy sustainable. As part of this plan, the preparation of a renewed sustainable action plan was announced to further the work already undertaken in the sustainable finance action plan in 2018.

A year later, and after a public consultation process, the European Commission is finalizing its new plan, which is expected to be published by end March 2021 with the following objectives:

  • to strengthen the foundations of sustainable investments with the completion of the EU taxonomy, including the assessment by next year of the possibility to extend the EU taxonomy to light green and brown activities
  • to enhance climate and environment disclosure with the adoption on non-financial reporting standards (NFRD review)
  • to increase opportunities for investors with the adoption of an EU green bond standard, and the EU Ecolabel for financial products
  • to take into account climate risk in financial system, there the European Commission will focus on the prudential frameworks

In parallel with its work within the EU, the EU Commission has also initiated a dialogue with other countries to address more globally the issue of the lack of coherent green investment definition and the low degree of transparency.

In October 2019, the Commission launched the International platform for sustainable finance (IPSF) which has been joined by 40 jurisdictions (including the EU) together representing 55% of global gas emissions. The current membership does not include the United States, but the recent US presidential election might lead the US to reconsider. The UK has shown interest to join once the Brexit negotiations are finalised.

The main focus of this platform are green taxonomy, standards, disclosure and labels.

There are currently two dedicated working groups within this platform expected to produce reports by mid 2021:

  • on taxonomy (focusing on EU and China taxonomy models)
  • on environmental disclosure

Next key dates:

  • We are expecting the level 2 measures on AIFMD, UCITS and MiFID to be published shortly, as well as the Taxonomy level 2 to be published shortly
  • The renewed sustainable finance strategy is expected for March 2021
  • The NFRD review is expected for Q1 2021

The ABBL is closely monitoring sustainable finance developments and will inform its Members as new initiatives arise. The ABBL has recently launched a dedicated Sustainability Committee to engage a strategic dialogue with its Members and closely monitor sustainable finance developments and bring them forward to the financial sector. This Committee will serve as a knowledge sharing platform and ensure adequate coverage and communication to Members about the main topics/initiatives for the Luxembourg Banking sector.

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