In December 2016 the European Union (EU) opened the sustainable finance conversation with a loud statement, assembling a group of 20 “senior experts from civil society, the finance sector, academia” and other institutions to steer the debate.
The so-called HLEG was charged with a serious mission; to scope out “the scale and dimensions of the challenges and opportunities that sustainable finance presents”.
But HLEG was also asked to recommend “a comprehensive programme of reforms” to set the EU financial system onto a more sustainable footing. Just over 12 months later, the EU Commission incorporated the final HLEG proposals into its ‘Action Plan for Financing Sustainable Growth’ that laid out several priority times for the agenda including:
- establishing an EU sustainability taxonomy, starting with climate mitigation and adaptation, to define areas where investments are needed most;
- clarifying investor duties to extend the time horizons of investment and bring greater focus on environmental, social and governance (ESG) factors into investment decisions;
- upgrading disclosures to make sustainability opportunities and risks transparent; and,
- enabling retail investors to invest in sustainable finance opportunities.
The HLEG wish-list goes further to cover goals such as creating official EU sustainability standards for financial assets and creating the conditions for a sustainable infrastructure plan for Europe.
Importantly, the HLEG proposals and ensuing EU action plan are aimed at improving access to sustainable investment rather than adding more complexity and regulatory burdens to the financial industry. The EU Action Plan also goes well beyond merely heaping new rules on investment institutions with a much more ambitious target of embedding sustainability into the fabric of finance and business across the region.
Now nearly three years since the EU Commission put its sustainability plan into action – and amid a second tranche of proposed reforms for the 2020-25 period – in a five-part blog series (see below), we review the journey to date and map out the most promising routes ahead to reach the HLEG destinations.
Over the last four years, the EU has talked-the-talk – now it’s time to walk the walk.