European Commission consultation on Renewed Sustainable Finance Strategy (8 April 2020)

On 8 April 2020, the European Commission (EC) issued a consultation on Renewed Sustainable Finance Strategy. This consultation follows up several actions already undertaken by the recently appointed  European Commission towards the objective of a greener and more sustainable European economy (Communication on a European Green Deal, European Climate Law, Consultation on the revision of the Non-Financial Disclosure Directive…).

It reiterates the fact that the European Commission considers that the financial system is not transitioning fast enough and there is more to be done by the financial sector in order to support sustainable business and businesses on the transition path to sustainability. Indeed, the EC notes that in order to achieve climate-neutrality and address current environmental challenges, “The financial and industrial sectors will have to undergo a large-scale transformation requiring massive investments”.

It also clarifies that the COVID-19 outbreak reinforces the criticality of sustainability and resilience, as expert studies had already highlighted the link between environment concern and the emergences of epidemies.

The consultation addresses many topics of concerns for the financial sector and asset managers such as ESG data, sustainability research and ratings, labels, green bond standards, green securitisation, promoting cross-border green investments, or promoting sustainable finance agenda globally.

The consultation topics are organised around three main objectives:

1. Strengthen the foundations for sustainable investments by creating an enabling framework, with appropriate tools and structures - how to move from a short-term financial performance focus to long-term sustainable development perspective?

2. Increase opportunities to have a positive impact on sustainability for all (citizens, financial institutions and corporates) - how to maximise impact by financing green?

3. Better manage and integrate climate and environmental risks within the financial sector, while taken due care of social risks when relevant - how to reduce risk exposure while “greening” finance?

This consultation is a great opportunity for everybody to contribute to the green and sustainable transition while expressing views and sharing feedbacks and suggestions with the European Commission. The opportunity to contribute to the consultation will remain open until 15 July 2020.