The European Commission's High-Level Expert Group on Sustainable Finance has published its first report setting out concrete steps to create a financial system that supports sustainable investments and a low carbon, more resource-efficient and sustainable economy. A final report from the expert group, which is chaired by Christian Thimann, is due at the end of 2017.
The report recommends:
- quick action to include a classification system for sustainable assets;
- a European standard and label for green bonds;
- fiduciary duty that encompasses sustainability;
- better disclosure from financial institutions and companies on how sustainability is factored into decision-making; and
- a 'sustainability test' for relevant EU financial legislation.
Although not part of the current report's recommendations, the expert group will also continue to consider the following policy areas:
- integrating sustainability considerations in ratings;
- improved transparency requirements for listed companies; and
- increasing the level of sustainable investments through stable, long-term policy frameworks and a strong pipeline of sustainable projects.
The work done by the expert group is part of the Commission's strategy on sustainable finance and its Capital Markets Union (CMU) initiative but it also aims to address the challenge of climate change, as one of the group's members, Ingrid Holmes, told Euractiv.
Holmes lists some of the conclusions reached by the expert group, which include:
- EU countries should develop detailed national capital raising plans setting out what is needed in terms of sustainable infrastructure and how private sector investment will be attracted to finance that infrastructure;
- the EU budget’s multi-annual financial framework should be revised to exclude support for unsustainable investments and the EU’s public banks should lead the way in a complete shift away from unsustainable investment;
- part of the EU budget should be dedicated to allowing more private sector investors to take an active role in funding projects that meet Europe’s social objectives and an EU sustainable fund label should be developed to give confidence to citizen investors to get involved in investing in a more sustainable European future.
CTMfile take: It's encouraging to see the financial sector setting itself these targets and focusing on sustainable, ethical finance that will also tackle climate change.
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