EU breaks new ground on sustainable finance - but more needed
Posted on 08 March 2018
More money would go into sustainable sectors rather than fossil fuels, but it's not enough to align with the Paris Agreement.
Brussels, Belgium - 8 March 2018
The EU has made clear its intent to become the world’s leader in sustainable finance with its bold Action Plan published today. While the proposals would help more money go into sustainable sectors rather than fossil fuels, they are still not enough to align with the Paris Agreement on climate change.
The Action Plan outlines important new legislation covering the disclosure of climate impacts of certain funds and indices, and Green Bond Standards. It would also make sustainability something that both investors and EU financial supervisors must take into account.
However, some key recommendations of the Commission’s advisory group on sustainable finance - the ‘High Level Expert Group’ - are missing or patchy.
Sébastien Godinot, Economist at WWF European Policy Officesaid: “The EU will be a global trailblazer on sustainable finance if these proposals pass into law. Yet they still fall short of what the Paris Agreement and its ‘well below 2°C’ temperature limit require. The Commission should have gone further to ensure mainstream benchmarks - like the FTSE 100 - and retail funds have to disclose their climate impacts. We need more clarity on where financial flows are going, so we can make them work better for people and planet!
“More work will be needed in the implementation phase of the Action Plan to complete the commitments and make sure they becoming binding”, concluded Godinot.
Pascal Canfin, Director of WWF France and member of the EU High Level Expert Group on sustainable finance (HLEG), commented: “It’s now over to Member States to support the European Commission’s relatively ambitious proposals and rapidly agree to their implementation. The ambition from the final HLEG report must not be weakened.”
Most of WWF’s key asks to the European Commission on sustainable finance were included in the action plan. These are:
Integration of sustainability into EU investor duties;
European standards for green bonds and labels, building on an EU sustainability taxonomy - a classification system of sustainable sectors;
Investment advisers required to ask about and respond to sustainability preferences of retail clients.
Following the Action Plan, the Commission will table legislative proposals based on the plan’s proposals in March and May 2018. It will also set up several Technical Expert Groups to start implementing the commitments made in the plan.
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