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EU sustainable finance - What lies ahead

On 6 July, the European Commission published three initiatives in the field of sustainable finance. These initiatives are: (1) a new Sustainable Finance Strategy, (2) a proposal for a standard for European green bonds, and (3) a Delegated Act on the information to be disclosed by financial and non-financial companies based on the EU Taxonomy Regulation.

The initiatives revolve largely around the EU Taxonomy Regulation, which is a classification system to establish which investments are environmentally sustainable. Under the EU Non-Financial Reporting Directive, larger companies are required to report on how and to what extent their activities are aligned with the Taxonomy.

The Sustainable Finance Strategy Communication sets out legislative proposals the Commission intends to take to achieve sustainable finance. These include, among others, the creation of a general framework for labels for financial instruments as well as a review of the EU Taxonomy Regulation reporting requirements, which may include new reporting requirements on social information such as the respect for human rights and labour standards.

In addition to the Communication, the Commission has published a proposal for a Regulation on European green bonds. Under the proposed framework, the funds raised by green bonds should be fully spent on projects that are aligned with the EU Taxonomy.

Finally, the Commission has adopted the Delegated Act supplementing Article 8 of the Taxonomy Regulation, which specifies the content, methodology and presentation of information to be disclosed by financial and non-financial companies concerning the environmental performance of their assets and economic activities.

To access the initiatives, please click here.

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