The action plan adopted in March 2018 has 3 main objectives: (1) reorient capital flows towards sustainable investment, for sustainable and inclusive growth; (2) manage financial risks stemming from climate change, environmental and social issues; and (3) foster transparency and long-termism in financial activity.
Concretely, the action plan announces a taxonomy to define what is sustaible, EU labels for green financial products and more transparency for clients and corporations (reporting).

Implemented in

  • Europe and Central Asia

Sector of activity
Financial Sector

Type of initiative
Financial Instruments & Investments

Type of lead actor
Government / public sector

Start date
08/10/2018

Shared by

Jesus Alquézar Sabadie

Socio-economic analyst

European Commission - DG Environment

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Objectives

- Establishing a common language for sustainable finance, i.e. a unified EU classification system – or taxonomy – to define what is sustainable and identify areas where sustainable investment can make the biggest impact.

- Creating EU labels for green financial products on the basis of this EU classification system: this will allow investors to easily identify investments that comply with green or low-carbon criteria.

- Clarifying the duty of asset managers and institutional investors to take sustainability into account in the investment process and enhance disclosure requirements.

- Requiring insurance and investment firms to advise clients on the basis of their preferences on sustainability.

- Incorporating sustainability in prudential requirements: banks and insurance companies are an important source of external finance for the European economy. The Commission will explore the feasibility of recalibrating capital requirements for banks (the so-called green supporting factor) for sustainable investments, when it is justified from a risk perspective, while ensuring that financial stability is safeguarded.

- Enhancing transparency in corporate reporting: we propose to revise 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 (TCFD).

Activities

As collected through the One Planet Reporting

No activities have yet been reported under this initiative

Impact and Results

Expected impacts:

- reorient capital flows towards sustainable investment, in order to achieve sustainable and inclusive growth;
- manage financial risks stemming from climate change, environmental degradation and social issues; and
- foster transparency and long-termism in financial and economic activity.