On Thursday 16 July, the three European Financial Supervisory Authorities (ESAs) published their responses to the Commission’s public consultation on its renewed sustainable finance strategy (see EUROPE 12388/7), which forms part of the ‘Green Deal’ and is due to be launched in the third quarter of 2020.
The responses cover a wide range of topics, from reducing risks related to environmental, social and governance (ESG) factors to increasing opportunities for citizens, financial institutions and businesses to have a positive impact on sustainability.
In a joint letter addressed to Valdis Dombrovskis, the Commission’s Executive Vice-President, on the same day, the chairs of the three ESAs support the Commission’s ambition in this area and set out a number of common concerns.
They also highlight the need to ensure high quality and user-friendly sustainability data. They strongly believe in the potential of digital tools and are of the opinion that establishment of a “publicly accessible, single EU data platform covering both financial and ESG information” would grant all market participants equal and timely access to publicly reported information.
The three ESAs also call for a “robust and proportionate regulatory framework to promote effective risk management and a long-term perspective in financial decision-making”.
They are therefore in favour of the implementation of corporate governance arrangements and believe that it would be helpful to improve clarity around the link between a company’s non-financial performance and the variable remuneration afforded to directors.
Another common priority is the need for investors and consumers to be able to buy and use sustainable financial products in a secure and transparent manner.
In this regard, it should be noted that, in addition to the ‘green’ taxonomy, all three ESAs support a ‘brown’ taxonomy for activities that cause significant environmental damage, and a ‘social’ taxonomy.
Their responses also reveal that they attach particular importance to the role of ecolabels. In their view, the scope of the ecolabel should be extended at EU level to a wider range of financial products.
The responses can be found at: https://bit.ly/2B8zNMh (ESMA); https://bit.ly/3h6y9dt (EBA); and https://bit.ly/2CKE3Su (EIOP) (Original version in French by Marion Fontana)