Stockholm (NordSIP) – The European Commission unveiled its Action Plan for boosting sustainable finance in the EU last week (March 8th), on the basis of recommendations made by the High-Level Expert Group on Sustainable Finance (HLEG). The plan is part of the Capital Market’s Union (CMU) effort to connect finance to the specific (green) needs of the European economy.
Roughly €180 billion of additional investment – annually – will be needed to meet the EU targets of a 40% cut in greenhouse gas emissions.
The plan sets out a number of initiatives, including the creation of EU labels for “green” financial products, strengthening the imperatives for asset managers and institutional investors to take sustainability criteria into account, and improvements in “corporate reporting”. The heart of the effort is to determine a “sustainability” category that will both address climate mitigation and identify the products that can benefit from lower capital requirements under existing rules for banks and insurers.
The European Commission will forward a legislative initiative to the European Parliament to formalise the framework in May.
“Inspired by the work of the High-Level Expert Group, we are presenting our plans for a far-reaching reform that could set the global benchmark for sustainable finance. Only with the help of the financial sector can we fill the annual €180 billion funding gap to reach our climate and energy targets. This will help to support a sustainable future for generations to come,” said Valdis Dombrovskis, Vice President for Financial Stability of the EU Financial Services and CMU said in a press release.
Activists have criticised the plan for falling short, following “decades of massive market failure.” “Decades of damage prove that voluntary measures for Europe’s financial sector are not enough; the EU must regulate now,” said Global Witness head of EU Advocacy Rachel Owens.
Meanwhile, though the wheels of bureaucracy grind slowly, the EU is doing what it can:
“Global Investments hold the key to fighting climate change, with trillions already invested in solutions such as renewables and energy efficiency. The Paris Agreement is a massive investment opportunity. How can we unlock it? [The] action plan will help Europe’s financial sector [to] position itself as a leading global destination for investments in green technologies,” added Commissioner for Climate Action and Energy Miguel Arias Cañete.
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