European Commission releases its Action Plan for Financing Sustainable Growth

LaRae LongReforming Global Finance, Sustainability Research Group

“Ethical Markets welcomes this report from the European Commission, which will accelerate the necessary shift from fossilized sectors to the growing greener, healthier, knowledge-richer, sustainable sectors of the world’s economies.  We have tracked  private investments and technologies in these sectors since 2007 in our “2017 Green Transition Scoreboard®” .                    ~Hazel Henderson, Editor”.

European Commission releases its Action Plan for Financing Sustainable Growth
European Commission Action Plan Financing Sustainable Growth

Dear Hazel,

Today the European Commission released its Action Plan for Financing Sustainable Growth, which will implement recommendations based on the EU HLEG report on sustainable finance.

It includes a comprehensive set of supportive tools and resources, such as: proposals for a taxonomy on climate change, environmentally and socially sustainable activities; standards and labels for sustainable financial products; support for sustainable infrastructure; mainstreaming ESG factors into market research and credit ratings; exploring how corporate governance can better enable sustainable finance; enhanced oversight of sustainability by the European Supervisory Authorities, and more.

Among the proposals particularly relevant to PRI signatories, the Action Plan proposes:

  • Clarifying institutional investors and asset managers’ duties – the Commission proposes the introduction of primary legislation in Q2 2018. It aims to increase capital flows to ESG investments by ensuring that ESG factors are consistently considered by institutional investors and asset managers in investment processes, and to increase transparency about how investors are integrating sustainability factors into their processes.
  • Incorporating sustainability in suitability assessment of financial instruments and insurance products – the Commission proposes the introduction of secondary legislation to amend MiFID II and IDD delegated acts for Q2 2018 to ensure that sustainability preferences are considered as part of suitability assessments. In addition, the Commission will invite ESMA to include provisions sustainability in its guidelines for suitability assessments, also for publication by Q2 2018.
  • Increasing the transparency of sustainability benchmarks – the Commission proposes the introduction of secondary legislation for Q2 2018 to improve the transparency of sustainability benchmarks, their methodology and features, which will build further on the work of the EU sustainability taxonomy.

The PRI was delighted to contribute to the EU HLEG as an observer, and to see many recommendations from the EU HLEG incorporated into this comprehensive plan. We warmly welcome the Action Plan for Financing Sustainable Growth and will continue to work with signatories and the European Commission to support its delivery.

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• Join one of the PRI’s sustainable financial system projects

Best wishes,

Nathan Fabian

Director of Policy & Research