HLEG Publishes Final Recommendations

Stockholm (NordSIP) – The High-Level Expert Group on Sustainable Finance (HLEG) published its final report Wednesday (January 31). Financing a Sustainable European Economy makes strategic recommendations for implementing a financial system designed to support sustainable investment, and is the fruit of a year’s labour by the Group.

HLEG was established in December 2016 by the European Commission to develop a comprehensive and overarching sustainable finance strategy for the European Union through its Capital Markets Union (CMU) Action Plan as part of the implementation of the EU Agenda for sustainable development and the stipulations of the 2015 Paris Accord. Chaired by Christian Thimann, HLEG is comprised of 20 senior experts from the financial sector, civil society and academia.

HLEG published an interim report in July 2017 identifying two main focus areas: to minimise risk by focusing on ESG factors and helping to accelerate the transition to a low-carbon economy by strengthening financing for innovation, infrastructure and other emblems of long-term growth.

“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,” commented Jyrki Katainen, EU Vice-President responsible for Jobs, Growth, Investment and Competitiveness. “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 determines the need for roughly €180 billion in additional investments annually to meet the 40% reduction in greenhouse gas emissions stipulated in the EU’s 2030 targets agreed upon in Paris, which can be met by large amounts of private capital in sustainable investments from the financial sector. The report outlines how the financial sector can ‘reconnect’ with economy to support the transition to a more resource-efficient and circular economy while improving the stability of the financial system by reorienting investment flows into long-term sustainable projects.

Among the recommendations made in the report are:

  • a classification system to provide market clarity on what is sustainable;
  • the clarification of investor duties in the context of a sustainable financial system;
  • the improvement of company and institutional disclosure on how sustainability factors into decision-making;
  • an EU ‘label’ for sustainable investment funds;
  • a European standard for green bonds;
  • the incorporation of sustainability into the European Supervisory Authority mandates

“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,” said Valdis Dombrovkis, EU Vice-President responsible for Financial Stability.

The European Commission will put forth its comprehensive Action Plan in the next weeks, which together with the report will form the basis for negotiations in Brussels on March 22.

Eurosif Executive Director published an op-Ed last year to illuminate the objectives of the HLEG.

Read the final HLEG report here

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