Action plan on financing sustainable growth
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).
- 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).
