EU Commission action plan on sustainable finance

In March 2018, the European Commission adopted an action plan on sustainable finance as part of a strategy to integrate environmental, social and governance considerations into its financial policy framework and mobilise finance for sustainable growth. In May 2018, the Commission released the first legislative package under the action plan. The four proposals included in the package are: (1) a unified EU classification system (‘taxonomy’), (2) investors’ duties and disclosures, (3) low-carbon benchmarks, (4) better advice to clients on sustainability. In July 2018, the Commission also established a technical expert group on sustainable finance (TEG) to inform work on the action plan, notably in the development of a classification system for sustainable economic activities, an EU green bond standard, methodologies for low-carbon indices, and metrics for climate-related disclosure.

More information on the work of the TEG can be found here. For an open letter calling on the EU Commission to include human rights expertise in the technical expert group on sustainable finance, to which the Business & Human Rights Resource Centre was also a signatory, see here.

The European Green Deal has announced a Renewed Sustainable Finance Strategy, which aims to ensure that financial systems support the transition towards sustainability in a context of recovery. The renewed strategy will build on the action plan and the work of the TEG. To inform the development of the renewed strategy, the Commission launched a consultation (deadline: 15 July).

The TEG's mandate ends on 30 September 2020. Following the adoption of the Taxonomy Regulation in June 2020, the Commission launched a call for applications for members of the 'Platform on sustainable finance', as set out by the taxonomy (deadline: 16 July). The platform will be an advisory body, comprising a group of experts who will advise the Commission on the technical screening criteria for the EU Taxonomy, among other, as well as on sustainable finance more broadly.

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Article
7 July 2020

European Supervisory Authorities consultation on ESG disclosures under EU Sustainable Finance Disclosure Regulation (Deadline: 1 Sep)

Author: European Supervisory Authorities

The European Supervisory Authorities (ESAs) welcome comments on this consultation paper setting out the proposed Regulatory Technical Standards (RTS) on content, methodologies and presentation of disclosures under the Sustainable Finance Disclosure Regulation (SFDR).

The ESAs invite comments on any aspect of this paper. Comments are most helpful if they:

·       indicate the specific point to which a comment relates;  

·       contain a clear rationale;  

·       provide evidence to support the views expressed/rationale proposed; and 

·       describe any alternative regulatory choices that the ESAs should consider.

The ESAs also invite specific comments on the questions on the draft RTS as listed in Section 4, and any input on the preliminary impact assessment in Section 5.  

To facilitate the responses, the ESAs have made available Annex 1 - Template principal adverse impacts statement in word format. 

Submission of responses

The consultation paper is available on the websites of the three ESAs. Comments on this consultation paper should be sent using the response form, via the ESMA website under the heading ‘Your input/Consultations’  Please send your comments in the provided response form by  1 September 2020...

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Article
18 June 2020

Sustainable Finance: Commission welcomes the adoption by the European Parliament of the Taxonomy Regulation

Author: European Commission

The European Commission has today welcomed the adoption by the European Parliament of the Taxonomy Regulation – a key piece of legislation that will contribute to the European Green Deal by boosting private sector investment in green and sustainable projects.

It will help create the world's first-ever “green list” – a classification system for sustainable economic activities – that will create a common language that investors can use everywhere when investing in projects and economic activities that have a substantial positive impact on the climate and the environment. By enabling investors to re-orient investments towards more sustainable technologies and businesses, this piece of legislation will be instrumental for the EU to become climate neutral by 2050.

As set out by the Regulation, the Commission has also launched today a call for applications for members of the Platform on Sustainable Finance. This platform will be an advisory body composed of experts from the private and public sector. It will assist the Commission in the preparation of technical screening criteria (the so-called ‘delegated acts'), which will develop the taxonomy further. They will also advise the Commission on the further development of the EU Taxonomy to cover other sustainability objectives and provide advice on sustainable finance more broadly...

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Article
14 April 2020

EU Commission launches consultation on the renewed sustainable finance strategy (Deadline: 15 July 2020)

Author: European Commission, Directorate-General for Financial Stability, Financial Services and Capital Markets Union

8 April 2020

All citizens, Member States and organisations are invited to contribute to this consultation. This includes beneficiaries and end-clients, pension and insurance providers, insurance companies, asset managers, banks, financial advisors, service providers (index providers, research providers), non-financial companies, law firms, NGOs, academia, public authorities and other stakeholders.

Building on the 2018 Action Plan on financing sustainable growth, the renewed sustainable finance strategy will provide a roadmap with new actions to increase private investment in sustainable projects and activities to support the different actions set out in the European Green Deal and to manage and integrate climate and environmental risks into our financial system. The initiative will also provide additional enabling frameworks for the European Green Deal Investment Plan...

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Article
9 April 2020

EU says green finance will be 'key focus' of post-virus recovery phase

Author: Frédéric Simon, EURACTIV.com

As European countries fight the coronavirus pandemic, they “must not lose sight” of the EU’s climate neutrality objective, the European Commission reminded on Wednesday (8 April).

The EU executive on Wednesday launched a public consultation on its “Renewed Sustainable Finance Strategy”, part of a €1 trillion package to make the European economy greener by 2030...

“Creating a more sustainable and resilient economy will be a key focus of the recovery phase and the Renewed Sustainable Finance Strategy will be essential to mobilising much-needed capital,” he [Valdis Dombrovskis, the EU Commission’s executive vice-president in charge of the economy] said in a statement.

The renewed strategy will aim to boost green investments by fully integrating “climate and environmental risks into the financial system,” the Commission indicated, saying it aims to adopt the updated green finance plan in the second half of 2020...

The strategy will build on previous initiatives such as the Commission’s 2018 Action Plan on Financing Sustainable Growth and the reports of the Technical Expert Group on Sustainable Finance (TEG), the EU executive said.

E3G, a climate think tank, said the importance of green finance could not be overstated, adding it will help shape Europe’s economic recovery in the wake of the current health and economic crises...

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Article
17 December 2019

EU reaches deal to define 'sustainable' investment

Author: Elena Sánchez Nicolás

The Finish EU presidency, European Commission and the European Parliament on Monday evening (16 December) all agreed on the common classification system for environmentally-sustainable investments...

The taxonomy also aims to end greenwashing and oblige corporates to disclose environmental, social and governance (ESG) factors and risks...

The commission is expected to draft technicalities of the different categories "low-carbon", "transition" or "enabling" activities by the end of 2020, although the full set of labels will be developed by a Technical Expert Group on Sustainable Finance...

Gas and nuclear [...] energy forms, like all technologies covered by the taxonomy, will be subject to the "do not significant harm" (DNSH) principle...

[A]ccording to Sébastien Godinot, economist at NGO Worldwide Fund for Nature (WWF), "the final result is a robust and balanced deal ensuring that the taxonomy will be built on climate and environmental science – a must for this critical part of the EU sustainable finance agenda"...

[A] coalition of more than 30 civil society organisations believe that "given the urgency of the climate crisis, the law should ensure that the climate taxonomy enters into force before the end of 2020".

"We cannot afford to delay such action as investments are badly needed," they wrote in a letter to EU top negotiators.

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Article
13 December 2019

New policy brief: EU Regulation on Investor Disclosure on sustainability risks and due diligence

Author: Global Witness & ActionAid

"EU INVESTOR DISCLOSURE REGULATION", 9 Dec 2019

New rules, which came into force in December 2019, require European investors such as banks, pension funds and insurers, to disclose their impacts on people and planet and to publish the action they are taking to prevent harms.

Our new briefing, co-authored with Action Aid, outlines practically what the rules mean, and how they can be implemented in a way that may be most effective for people and the planet...

As part of these new rules, investors will now need to:

  • be transparent about the principal adverse impacts their investments have on people and planet;
  • publish details of their “due diligence” policies to make sure they can systematically identify, prevent and mitigate and account for those adverse impacts...

This briefing is intended to provide clarity on the impact of these rules and clearly outlines how under the new regulation investors must be able to identify whether the assets or companies they are investing in will have any negative impact on people and the planet and then mitigate that impact.

EU member states will have until May 2021 to fully implement these rules. We will be calling for speedy and robust implementation of these rules...

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Download the full document here

Item
27 November 2019

[FULL TEXT] Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector

Author: Official Journal of the European Union

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Article
15 November 2019

Council of EU Adopts ESG Disclosure and Benchmarks Legislation

Author: Latham & Watkins LLP, Lexology

On 8 November 2019, the Council of the EU [...] announc[ed] the adoption of legislative reforms that aim to enhance the proposed capital markets union. Notably, two of the reforms are related to sustainable finance: the Low Carbon Benchmark Regulation (LCBR), and the Disclosure Regulation...

The LCBR amends the previous Benchmarks Regulation, and was introduced in response to the perceived lack of uniformity among existing low-carbon indices...

To combat these issues, the LCBR introduces the following:

  • A new category of benchmarks, comprising two types of financial benchmark: an EU climate transition benchmark, and a “Paris-aligned” benchmark...
  • An obligation for all benchmarks [...] to disclose [...] whether or not their benchmarks pursue environmental, social, and corporate governance (ESG) objectives...
  • An extension of the transition regime under the Benchmarks Regulation to 2021, for critical and third-country benchmarks...

[T]he LCBR empowers the European Commission to lay down the specific minimum standards for the two new benchmarks... [T]he Commission will take into account the work of the Technical Expert Group on Sustainable Finance, which published a final report on the climate-related benchmarks [...] on 30 September 2019...

The Disclosure Regulation governs ESG disclosure requirements for financial market participants and financial advisers, and how those firms integrate ESG factors into their investment decisions... The next step is for European supervisory authorities to come up with specific and detailed rules for the implementation of the Disclosure Regulation...

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Article
26 August 2019

EU sustainable finance 'taxonomy' proposal provides insufficient social & human rights safeguards, argue NGO experts

Author: Eleni Choidas, ShareAction, Lis Cunha, ActionAid International & Rachel Owens, Global Witness, via Euractiv

'Human rights and green finance: friends or foes?', 22 August 2019

...EU Member States in the Council are currently discussing the Taxonomy proposal... Once finalised, it is expected that... this classification system... will help companies raise capital in environmentally friendly operations, as well as give investors a common framework that will prevent greenwashing.

Yet, ...not enough attention is being paid towards guaranteeing that the Taxonomy will not unwittingly promote harm to people as it seeks to power environmental progress...

Many vulnerable communities in the South have already lost their land and seen their food security undermined in the expanding drive for biofuel production. Cases of displacement, harms to indigenous peoples’ rights, threats and killings linked to wind, hydropower and solar projects around the world have also been reported...

It is crucial that strong social safeguards are introduced as a key compliance requirement in the Taxonomy...

The co-legislators must... ensure that complying with the Taxonomy will require due diligence processes which... are based on engagement with stakeholders impacted...

Secondly..., policy-makers must ensure the inclusion of human rights experts in the forthcoming Permanent Platform on Sustainable Finance, tasked with the continued oversight and review of these safeguards.

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Article
24 June 2019

Commission publishes guidelines to improve how firms report climate-related information and welcomes three new important reports on climate finance by leading experts

Author: European Commission

18 June 2019

The European Commission has today published new guidelines on corporate climate-related information reporting, as part of its Sustainable Finance Action Plan. These guidelines will provide companies with practical recommendations on how to better report the impact that their activities are having on the climate as well as the impact of climate change on their business...

They will provide guidance to around 6,000 EU-listed companies, banks and insurance companies that have to disclose non-financial information under the Non-Financial Reporting Directive...

Also today, the Commission welcomes three important expert reports published by the TEG on sustainable finance:

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