EU HLEG Final Report – Sustainable Finance

The EU High Level Expert Group on Sustainable Finance published by far the most welcome document I have seen in a very long time (if ever) at the end of January this year.

The HLEG, which comprised 20 experts (6 of whom were from the UK) has brought together a range of proposals that relate to the role of finance in making the essential shift towards more sustainable business practices and lifestyles.

Download full report here.

This comprehensive report runs to 100 pages.

The proposals relating to retail SRI start on page 27 – and may look somewhat familiar to users of Fund EcoMarket.

There is no point me reinventing the wheel as there are too many points of interest to list,  so here is the table of contents…

II Renewing the purpose of finance

1. Building the world’s most sustainable financial system

2. Accelerating the shift to sustainable finance

3. Summarising the recommendations

III. Key recommendations

1. Establish and maintain a common sustainability taxonomy at the EU level

2. Clarify investor duties to better embrace long-term horizon and sustainability preferences

3. Upgrade disclosure rules to make sustainability risks fully transparent, starting with climate change

4. Key elements of a retail strategy on sustainable finance: investment advice, ecolabel and SRI minimum standards

5. Develop and implement official European sustainability standards and labels, starting with green bonds

6. Establish ‘Sustainable Infrastructure Europe’

7. Governance and Leadership

8. Include sustainability in the supervisory mandate of the ESAs and extend the horizon of risk monitoring

IV. Other Cross-Cutting Recommendations

1. Short-termism, sustainability and the ‘tragedy of the horizon’

2. Empower citizens to engage and connect with sustainable finance issues

3. Establish an EU observatory on sustainable finance to support evidence-based policy-making

4. Benchmarks

5. Accounting

6. Accelerate action to finance energy efficiency investments

7. ‘Think sustainability first’ principle

8. Leverage EU action to enshrine sustainable finance at global level

V. Financial Institutions and Sectoral Recommendations

1. Banking

2. Insurance companies

3. Asset management

4. Pension funds

5. Credit ratings and sustainability ratings

6. Stock exchanges and financial centers

7. Investment consultants

8. Investment banks

VI. Social and Broader Environmental Sustainability Recommendations

1. Social dimension

2. Natural capital and environmental challenges

3. Agriculture

4. Marine resources

VII. Conclusion

Readers should note that importantly the EU appears very supportive of this report and it appears likely that some of the key proposals will be enacted by the end of this year.

Fingers crossed!

Full report URL: https://ec.europa.eu/info/sites/info/files/180131-sustainable-finance-final-report_en.pdf

For additional reading see FSB TCFD and UN SDG frameworks.