EU unveils plans for sustainable financial system

The EU Commission has unveiled a strategy to make the European financial system for sustainable. Steps include an EU label for green financial products.

The EU commission has set out a roadmap to boost the role of finance in achieving a healthy economy that delivers on environmental and social goals as well.

The action plan on sustainable finance is part of the EU’s efforts to connect finance with the specific needs of the European economy to the benefit of the planet and society.

“Moving to a greener and more sustainable economy is good for job creation, good for people, and good for the planet,” First Vice-President Frans Timmermans, said in an EC Commission statement.

“Our proposals will allow investors and individual citizens to make a positive choice so that their money is used more responsibly and supports sustainability.”

One of the key features of the action plan is to establish a common language for sustainable finance, or what the EC calls “a unified EU classification system”, to define what is sustainable and identify areas where sustainable investment can make the biggest impact.

EU labels for green financial products will then be developed on the basis of this classification system, allowing investors to easily identify investments that comply with green or low-carbon criteria.

Other measures include clarifying the duty of asset managers and institutional investors as regards sustainability, requiring insurance and investment firms to advise clients on sustainability, and incorporating sustainability in prudential requirements.

Finally, transparency in corporate reporting should be enhanced by revising the guidelines on non-financial information to further align them with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures.

The action plan represents a key step towards implementing the Paris climate agreement and the EU’s own agenda for sustainable development.

As Finance commissioner Valdis Dombrovskis said, the measures 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.”


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