EC takes further steps to channel money towards sustainable activities

Written by Adam Cadle

22/04/2021

The European Commission (EC) has adopted a package of measures to help improve the flow of money towards sustainable activities across the European Union.

“By enabling investors to re-orient investments towards more sustainable technologies and businesses, today's measures will be instrumental in making Europe climate neutral by 2050,” it said. “They will make the EU a global leader in setting standards for sustainable finance.”

The package is comprised of:

- The EU Taxonomy Climate Delegated Act aims to support sustainable investment by making it clearer which economic activities most contribute to meeting the EU's environmental objectives. The Delegated Act will be formally adopted at the end of May once translations are available in all EU languages.

- A proposal for a Corporate Sustainability Reporting Directive (CSRD). This proposal aims to improve the flow of sustainability information in the corporate world. It will make sustainability reporting by companies more consistent, so that financial firms, investors and the broader public can use comparable and reliable sustainability information.

- Finally, six amending Delegated Acts on fiduciary duties, investment and insurance advice will ensure that financial firms, e.g. advisers, asset managers or insurers, include sustainability in their procedures and their investment advice to clients.

Commissioner responsible for financial services, financial stability and the Capital Markets Union Mairead McGuinness said:“The financial system plays a crucial role in the delivery of the EU Green Deal, and significant investments are required to green our economy. We need all companies to play their part, both those already advanced in greening their activities and those who need to do more to achieve sustainability. Today's new rules are a game changer in finance. We are stepping up our sustainable finance ambition to help make Europe the first climate-neutral continent by 2050. Now is the time to put words into action and invest in a sustainable way.”

Responding to the package of measures, EFAMA director general Tanguy van de Werve stated: "The limited scope of the Non-Financial Reporting Directive and the inconsistent sustainability reporting ecosystem constrain investors' ability to assess the ESG performance of investments. This CSRD proposal is essential in reducing the ESG data gaps faced by asset managers and supporting the development of green investment products. We call on the co-legislators to maintain the high level of ambition of the Commission’s proposal and to ensure its swift adoption. Time is of the essence.”

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