climate-related financial disclosures

The EU’s High-Level Expert Group on Sustainable Finance, established by the European Commission, has published its interim report and made early recommendations to move Europe towards a low carbon, more resource-efficient and sustainable economy.

The Commission said that this report is part of its broader efforts to map out a strategy on sustainable finance, which formed a priority action of the Capital Markets Union (CMU) Action Plan. Following the plan’s earlier focus on developing a more stable and resilient financial system, the Commission said it is now driving forward efforts to reorient the financial system so that it can support long-term, sustainable growth.

Sustainable Finance Group
EU’s Expert Group makes recommendations on sustainable finance

The Commission said it is vital that more private capital is mobilised towards green and sustainable investment so as to enable the transition to a low-carbon economy and the financial sector had a vital role to play in reaching the climate change goals of the Paris Agreement and the EU’s 2030 Agenda for sustainable development.

Following the report the Commission said it would explore some of its first recommendations which include a revised definition of  fiduciary duty that encompasses sustainability, better disclosure from financial institutions and companies on how sustainability is factored into decision-making, a ‘sustainability test’ for relevant EU financial legislation a European standard and label for green bonds and a classification system for sustainable assets.

Valdis Dombrovskis, vice-president for the Euro and social dialogue, also in charge of financial stability, financial services and capital markets union said: “Europe wants to look ahead to the low-carbon future Strengthening the EU’s global leadership on sustainable finance is one of the main priorities of the Juncker’s Commission. I am very pleased with the outstanding work of this high-calibre High-Level Expert Group under the leadership of Christian Thimann. I now look forward to the Group presenting its final recommendations by the end of 2017.”

The High-Level Expert Group will continue examining other policy areas, such as: integrating sustainability considerations in ratings, improved transparency requirements for listed companies, as well as increasing the level of sustainable investments through stable long-term policy frameworks and a strong pipeline of sustainable projects. e further recommendations in the final report, due at the end of 2017.

The International Integrated Reporting Council (IIRC) welcomed the significance placed on the integration of information for investors made by the European Union’s High-Level Expert Group.

Richard Howitt, chief executive, IIRC said: “The High-Level Expert Group has had the vision to see that to see that the scale of the challenge cannot be met by green investment vehicles alone, but by integrating the opportunities and costs related to climate change for mainstream investors. The findings are an important recognition of the role Integrated Reporting can play to help reform the capital markets system in the EU towards sustainable growth.”

The interim report will be the subject of a public consultation and will be debated at a public hearing on sustainable finance next week (18th July).

Last Updated: 14 July 2017

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