Implementation of the European Commission's (EC's) Action Plan on Sustainable Finance, which was adopted in March 2018, is underway, with support from an approved package of four legislative measures in May 2018, including on:
- A unified EU classification system ('taxonomy');
- Investors' duties and disclosures;
- Low-carbon benchmarks; and
- Better advice to clients on sustainability.
The Action Plan on Sustainable Finance has three objectives: (1) To reorient capital flows towards sustainable investment in order to achieve sustainable and inclusive growth; (2) To manage financial risks stemming from climate change, environmental degradation, and social issues; and (3) To foster transparency and long-termism in financial and economic activity. It is a response to recommendations from the High-Level Expert Group (HLEG) on Sustainable Finance, which were submitted to the Commission in January 2018.
Already, the European Parliament has adopted an amendment to Regulation 2016/1011 to introduce a framework for EU Climate Transition and EU Paris-Aligned Benchmarks, an amendment to the Delegated Regulation 2017/565 to integrate Environmental, Social, and Governance (ESG) Considerations into Investment Advice and Portfolio Management, and an amendment to Delegated Regulation (EU) 2017/2359 to integrate ESG considerations and preferences into the investment advice for insurance-based investment products. It has also prepared a series of related reports, including on an EU Taxonomy, Benchmarks, EU Green Bond Standard, and Climate-related Disclosures.