On Tuesday 6 July, the European Commission presented its revised strategy on sustainable finance (see EUROPE 12751/2), which includes several new tools it intends to develop in the coming years to raise its level of ambition.
Europe will need an estimated €350 billion of additional investment per year over the decade to meet its 2030 greenhouse gas (GHG) emissions reduction target in energy systems alone, European Commission executive vice-president Valdis Dombrovskis told a press conference.
EU Financial Services Commissioner Mairead McGuinness emphasised the urgency of tackling climate risk in order to preserve financial stability, but also warned of the risk of a financial shock, “if the move towards sustainability is disorderly”.
The European Commission’s main tool for sustainable finance is the EU taxonomy. And the EU institution intends to develop it further, notably by adopting a complementary delegated act on climate taxonomy covering activities - agriculture, some energy sectors and some manufacturing sectors - not yet covered by the first delegated act.
It also plans to propose legislation to support the financing of certain economic activities, mainly in the energy sector, including gas, that contribute to reducing GHG emissions in a way that promotes the transition to climate neutrality.
The European Commission also wants to make it easier for retail investors and SMEs to access sustainable financing opportunities. To this end, it will ask the European Banking Authority (EBA) to draw up, in 2022, an opinion on possible support tools for ‘green’ loans and mortgages. The EU institution will also propose increasing access to sustainable finance advisory services for SMEs.
Other announcements included the idea of creating a European benchmark on environmental, social and governance (ESG) factors, adjusting the EU prospectus rules, and amending the CRR/CRD framework to ensure that ESG factors are systematically included in banks’ risk management systems.
See the strategy: https://bit.ly/3hkaskP; and its annex: https://bit.ly/3yrO26T
New delegated act
On Tuesday, the European Commission also adopted its delegated act supplementing Article 8 of the Taxonomy Regulation, which requires financial and non-financial companies to disclose information to the public on how - and to what extent - their activities are associated with environmentally sustainable economic activities (see EUROPE 12715/7).
The delegated act specifies the content, methodology and presentation of the information that companies must publish on the part of their activities, investments and loans that are aligned with the EU taxonomy.
See the delegated act: https://bit.ly/3yu5QOY
First half-hearted reactions
Several stakeholders welcomed the new strategy’s ambition. This was particularly the case for Accountancy Europe, the CFA Institute, and ACCA. Mike Suffield, Director of Professional Insights at ACCA, also praised the aspects related to business information. However, he warned against “the risk of over-information”, calling for information provided by companies to be meaningful and useful for decision-making, while avoiding imposing an excessive compliance burden on companies.
On the other hand, for BEUC and Transport & Environment, the positive elements of the strategy are overshadowed by the possibility, left open by the European Commission, that gas could be considered ‘green’. Both organisations believe that such an approach would undermine the EU’s efforts to achieve sustainable finance. (Original version in French by Marion Fontana)