EU supports Sustainable Finance
On Wednesday, 21 April, the European Commission adopted an ambitious and extensive set of actions to take in order to help increase the flow of funds concerning sustainable activities across the European Union. These measures will be fundamental in helping Europe achieve the target of climate neutrality by 2050, as it will allow investors to redirect investments towards more sustainable technologies and businesses.
This plan comes in consequence of the European Green Deal, which is the sustainable growth strategy of the EU. It has the purpose of improving the well-being and health of citizens, making Europe climate-neutral by 2050 and protect, conserve and enhance the EU's natural capital and biodiversity.
With the purpose of participating in this effort, companies need a comprehensive sustainability framework so they can change their business models and adapt fittingly. All the components of this package will reinforce the trustworthiness and comparability of sustainability information, in order to guarantee the transition in finance and prevent greenwashing. It will put the European financial sector at the core of a sustainable and inclusive economic recovery from the COVID-19 pandemic and the longer-term sustainable economic development of Europe.
The package of measures is composed by:
- The EU Taxonomy Climate Delegated Act, which has the goal of supporting sustainable investment by making it clearer which economic activities most contribute to meeting the EU's environmental objectives. The College of Commissioners reached a political agreement on the text. The Delegated Act will be formally adopted at the end of May once translations are available in all EU languages. A Communication, also adopted by the College on Wednesday, sets out the Commission's approach in more detail.
- A proposal for a Corporate Sustainability Reporting Directive (CSRD), which aims to improve the flow of sustainability information in the corporate world. It will make sustainability reporting by companies more consistent, so that financial firms, investors and the broader public can use comparable and reliable sustainability information.
- Finally, six amending Delegated Acts on fiduciary duties, investment and insurance advice will ensure that financial firms, such as advisers, asset managers or insurers, include sustainability in their procedures and their investment advice to clients.
27 October 2021
26 October 2021
21 October 2021