The European Commission published the first three legislative proposals on the establishment of a framework to facilitate sustainable investment.
https://ec.europa.eu/info/publications/180524-proposal-sustainable-finance_en
The proposals, accompanied by an impact assessment, follow up on the European Union’s Sustainable Finance Action Plan released in March 2018.
The legislative package includes:
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- A unified EU classification system (‘taxonomy’)
- The proposed regulation sets out harmonised criteria for determining whether an economic activity is environmentally sustainable.
- This may serve as the basis for the future establishment of standards and labels for sustainable financial products.
- Investors’ duties and disclosures
- The proposed regulation will introduce disclosure requirements on how institutional investors integrate environmental, social and governance (ESG) factors in their risk processes.
- Asset managers and institutional investors would have to demonstrate how their investments are aligned with ESG objectives and disclose how they comply with these duties.
- A unified EU classification system (‘taxonomy’)
- Low-carbon benchmarks
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- The proposed regulation aims to create a new category of benchmarks, comprising the low-carbon benchmark or “decarbonised” version of standard indices and the positive-carbon impact benchmarks.
- Better advice to clients on sustainability