EC Publishes Communication on Funding Sustainable Growth Action Plan

The European Commission (“EC“) published a communication on its action plan for financing sustainable growth, available here. FAQs were also published alongside the communication, available here.

Sustainable finance generally refers to the process of taking due account of environmental and social considerations in investment decision-making, leading to more investments in longer-term and sustainable activities.

The action plan aims to shift capital flows towards sustainable investment to achieve sustainable and inclusive growth. This addresses the fact that currently there is insufficient investment to support an environmentally and socially sustainable economic system. It will also manage financial risks stemming from climate change, resource depletion, environmental degradation and social issues, and encourage transparency and long-term thinking in financial and economic activity. In particular, actions relating to matters including the following are identified in the plan:

  • Establish an EU classification system for sustainable activities
  • Create standards and labels for green financial products
  • Incorporate sustainability when providing financial advice
  • Develop sustainability benchmarks
  • Foster better integration of sustainability in ratings and market research
  • Clarify institutional investors’ and asset managers’ duties
  • Incorporate sustainability in prudential requirements

The Commission will report on the implementation of the action plan in 2019. An accompanying press release states that the Commission is organizing a conference to discuss the action plan on March 22, 2018.