The EU Commission today presented its new Sustainable Finance Package which includes plans to bring financial institutions along on its goal to create a carbon neutral continent by 2050. CISL and its finance leadership groups across banking, insurance and investment respond to the new strategy.
The Sustainable Finance Package builds on the sustainable finance action plan, published in 2018. It addresses four main areas of action: financing of transition plans, addressing the needs of and creating opportunities for citizens and SMEs, instituting double materiality approach for the financial sector as well as fostering and promoting an international consensus for an ambitious global agenda. In addition to a range of proposals on transition to a net zero economy, the strategy starts to include biodiversity and social considerations into the package of sustainable finance measures.
Commenting on the strategy, Nina Seega, CISL’s Research Director for Sustainable Finance said:
“The new strategy for financing the transition to a sustainable economy is a wide-ranging package of measures built to align the EU to a net zero economy. In addition to clarifying fiduciary duty, supporting capacity building for SMEs, engaging with the insurance industry on climate-related risks, strengthening the alignment between ESG ratings and mandating supervisory climate-related stress tests, it suggests an intensification of engagement on biodiversity, including an introduction of a framework for understanding biodiversity-related risks, as well as underpinning credible social investments with a social taxonomy. Now the focus must move onto a timely and comprehensive implementation of the strategy.”
Bronwyn Clare, Senior Programme Manager for CISL’s insurance leadership group, ClimateWise said:
“The new EU strategy for financing the transition to a sustainable economy recognises the key role of insurance to both societal and financial resilience. We welcome the emphasis on closing the protection gap, establishment of a Climate Resilience Dialogue and work on the identification of good practices by the insurance sector.”
Annabel Ross, Senior Programme Manager for CISL’s Banking Environment Initiative, said:
“The EU’s new strategy for financing the transition to a sustainable economy reflects the wide-ranging interdependencies for consideration as banks seek to accelerate progress in integrating climate and environmental factors into risk management systems and financial innovation. The proposed engagement, advisory and financial support to small and medium-sized enterprises (SMEs) is welcomed, contributing towards more inclusive sustainable finance that supports a green recovery.”
Lucy Auden, Senior Programme Manager for CISL’s Investment Leaders Group, said:
“Greater focus on the impacts of investment on society, highlighted by the pandemic, have underscored the urgent need for standardisation on how investors categorise their impact and dependencies on social issues. We welcome the proposed social taxonomy by 2021 and clarification on social issues by 2022 as the group thinks about how investors can deliver sustainable investment passed the delivery of a low carbon future.”
On 30 June in an open letter to Commission President Ursula von der Leyen and further key EU policymakers, CLG Europe members and business network partners, called on the EU to seize this opportunity and demonstrate leadership in the run up to the COP26 summit.