Speaker: Michael Spanos, Managing Director, Global Sustain Group
UN 2030 Agenda and Sustainable Development Goals and the Paris Climate Agreement need financing. To achieve the EU’s 2030 targets agreed in Paris, including a 40% cut in greenhouse gas emissions, EU has to fill an investment gap estimated at 180 billion EUR per year. The financial sector has a key role to play in reaching those goals.
In June 2019, the EU presented the Sustainable Finance Framework which includes the following documents (633 pages in total):
- an EU classification system – the so-called EU taxonomy – to determine whether an economic activity is environmentally sustainable (414 pages +25 pages the supplementary report);
- an EU Green Bond Standard (78 pages);
- methodologies for EU climate benchmarks and disclosures for benchmarks (66 pages); and
- guidance to improve corporate disclosure of climate-related information (50 pages) including alignment to the Non-Financial Reporting (NFR) Directive and the Task-Force for Climate-related Financial Disclosures (TCFD).
Objectives of this Sustainable Finance Framework include:
- Establish a unified EU classification system of sustainable economic activities (‘taxonomy’)
- Improve disclosure requirements on how institutional investors integrate environmental, social and governance (ESG) factors in their risk processes
- Create a new category of benchmarks which will help investors compare the carbon footprint of their investments.
- Amending the Markets in Financial Instruments Directive (MiFID II) and the Insurance Distribution Directive to include ESG considerations into the advice that investment firms and insurance distributors offer to individual clients.
This session will provide useful insights of the EU Sustainable Finance Framework, how investors and corporations can use the framework and eventually benefit from the transition to a low carbon economy.