Help keep the momentum going to green up the EU financial system, drive capital investment towards climate, sustainability and infrastructure goals
What’s it all about?
The EU High Level Expert Group on Sustainable Finance published its Interim Report setting out a host of recommendations for the creation of a financial system that supports sustainable investment. Formed in late 2016, the Expert Group is comprised of twenty banking, investment, and green finance and sustainability figures, including our CEO Sean Kidney.
This is the largest consultation of green finance ever undertaken by the EU. Its significance is underscored by the decision to have DG FISMA, the Directorate charged with financial stability, financial services and capital markets union, coordinate rather than the DG ENV, the environment directorate.
Full House at Brussels & London Presentations
The Brussels launch attracted an audience of five hundred on 18th July, and included presentations from the members of the Expert Group and several panel discussions with first reactions to the report. Both Vice Presidents of the European Commission, Valdis Dombrovskis and Jyrki Katainen, attended the briefing and welcomed the HLEG’s work so far and committed to begin implementing the recommendations in early 2018.
In London, Climate Bonds, the Cambridge Institute for Sustainability Leadership (CISL) & the PRI coordinated a half day stakeholder consultation to an overflow audience at the offices of Norton Rose Fulbright on the 20th July.
What you can do
If you want your views to be discussed at the next Expert Group meeting, then complete the questionnaire before the 6th September.
What’s in the Interim Report?
The early recommendations of the Expert Group are to:
- Develop a classification system for sustainable assets
- Establish a European standard and label for green bonds and other sustainable assets
- Clarify that fiduciary duty encompasses sustainability
- Strengthen ESG reporting requirements
- Introduce a 'sustainability test' for EU financial legislation
- Create 'Sustainable Infrastructure Europe' to channel finance into sustainable projects
- Enhance the role of the ESAs in assessing ESG-related risks
- Unlock investments in energy efficiency through relevant accounting rules
Green Bond Standards, Capital and Infrastructure
From a Climate Bonds perspective, these are a couple of points that stand out:
- European green bonds standard
- “the EU should consider introducing official European standards for green bonds; the EIB work with Climate Bonds Initiative to develop a taxonomy for green assets that contribute to meeting the EU’s climate change objectives is a next useful step in this direction”
- “the Commission introduces official European standards for green bonds, based on the association of the EU green taxonomy (once defined) and existing and widely accepted Green Bond Principles”
- Capital raising plans
- “develop capital-raising plans at the member state and EU levels to provide investors with visibility over the role they are expected to play in delivering on sustainability objectives”
- “create ‘Sustainable Infrastructure Europe’ – a dedicated advisory and match-making facility between public authorities and private investors would appear useful to boost Europe’s ambitious infrastructure plans”
- “investors need to become more engaged to ensure that sustainable investments are available”
Together with the recommendation around a classification system for sustainable assets, we think these core recommendations have the capacity to transform EU investment frameworks in a positive direction.
The last word
As we’ve noted previously, the Interim Report identifies a number of directions to build green finance and investment in the EU in order to meet the Paris climate and emissions reduction goals.
It’s also about ensuring the financial system is contributing to long term sustainable economic growth and positive social development.
In short; connecting finance and investment more directly to both climate action and the real economy.
There’s momentum behind it at EU/EC level.
The more responses the Expert Group receives the better. Institutional investors, asset managers, pension funds and sustainable investment groups should take this opportunity to contribute to the final report due in December.
The questionnaire is here. You know what to do.
‘Till next time,
P.S: You can follow the Expert Group on Twitter here @HLEG_Sus_Fin.
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