The EU has today hosted a high-level conference with the aim of increasing sustainability in the European financial sector through a series of reforms.
The conference was attended by a number of European Commissioners, who discussed the EU’s Action Plan on Sustainable Finance. The plan was launched earlier this month and seeks to reform the European financial sector, and establish the economic conditions necessary to drive sustainability throughout the EU economy.
The EU sees the reform of the financial sector as a vital element of decarbonisation and improving sustainability. If the commission’s action plan is successfully implemented, it will enable investors to more easily select sustainable projects in which to invest.
What does the action plan involve?
Key features of the commission’s action plan include the development of an EU classification system or taxonomy, which would synchronise priorities and allow investors target areas in which sustainable investments could make the most impact.
Other features of the plan are to enhance transparency in corporate reporting, and to create an EU labelling and classification system for green financial products, as a means to encourage the entire European financial sector to make more environmentally responsible investments.
What has the commission said?
European Commissioner Valdis Dombrovskis, responsible for Financial Stability, Financial Services and Capital Markets Union, said that the EU’s efforts in this area represent a fundamental part of its world-leading efforts to tackle climate change.
He said: “Europe is proud to be leading the global fight against climate change, just two years after the signature of the Paris Agreement. But to reach our commitments for emissions reductions, we are faced with a considerable task: we have a yearly funding gap of around €180bn to fill. Public money alone will not be enough for this.”
Addressing this shortfall in funding is only achievable by encouraging investors in the financial sector to prioritise sustainability as a criteria for investment, Dombrovskis added: “The financial sector will have to throw its full weight behind the fight against climate change. This is a challenge, but also an exceptional opportunity.”
