Stockholm (NordSIP) – With crucial elections in the EU looming, many sustainable investment organisations are eager to start the dialogue with the next European Commission and Parliament on the right foot. It is wise, as the policy decisions made during the next mandate will be key in defining the success of the EU Green Deal and making Europe the global sustainable finance hub. On 5 March, the UN-convened Principles for Responsible Investment (PRI) joined the discourse by publishing its 2030 EU Policy Roadmap. The document outlines a series of recommendations for European policymakers to accelerate private investment in the economic transition.
The PRI starts by acknowledging the significant progress made in Europe over the past six years, since the introduction of the EC’s 2018 Action Plan on Financing Sustainable Growth followed by the Strategy for Financing the Transition to a Sustainable Economy. Several new legislative measures that serve as the building blocks for a sustainable finance policy framework have been successfully launched, from the EU Taxonomy to mandatory disclosure requirements for investors, the Sustainable Finance Disclosure Regulation (SFDR), and for companies, the Corporate Sustainability Reporting Directive (CSRD).
That said, the challenges in implementing these sustainable finance policies persist. To address these, the PRI calls for cohesive and transformative policy actions. The report sets out six policy priorities, elaborating on each of these in six chapters. According to the PRI, the key topics for the European policymakers to focus on are the following:
- Finance the transition via swiftly developed sector roadmaps, comprehensive national strategies, robust corporate transition plans, an extended EU Taxonomy, and efficiently leveraged EU funding instruments.
- Clarify sustainable investment disclosures through a revised SFDR framework which includes a baseline of disclosures for all financial products and product categories with proportionate minimum criteria.
- Strengthen investor stewardship with a new omnibus legislation which recognises the critical role all forms of engagement play in sustainable finance policy, and further develop and clarify fiduciary duties.
- Ensure effective corporate governance via policy reform on taxation and political engagement and continue improving corporate reporting in ESRS reviews.
- Promote global interoperability by collaborating with policymakers worldwide to seek consensus on the importance of sustainability-outcomes-focused policy.
- Implement climate, nature, and social policies, as these issues are increasingly relevant for investment decisions, and financial markets depend on effectively implementing these policies for the economic transition.
“The next 5-year mandate will be pivotal and, while a lot has been achieved, further policies will still be needed to truly unlock private investment and fully support the sustainable economic transition,” comments Elise Attal, PRI’s Head of EU Policy. “The next Commission should focus on fine-tuning and improving the usability and coherence of the existing sustainable finance framework, building on it where necessary, and strengthening the links with broader EU Green Deal policies. This is necessary to achieve a coherent policy framework that accounts for sustainability risks, opportunities and impact by investors and companies.”
