EC published the action plan on sustainable finance, which is part of the Capital Markets Union's efforts to connect finance with specific needs of the European economy. The roadmap that is based on the recommendations of the High-Level Expert Group (HLEG) on sustainable finance. Along with this action plan, EC published the frequently asked questions and a factsheet on the action plan. EC is also organizing a high-level conference on March 22, 2018 to discuss this action plan.
The EC-adopted action plan on sustainable finance has three main objectives: reorient capital flows toward sustainable investment, to achieve sustainable and inclusive growth; manage financial risks stemming from climate change; environmental degradation, and social issues; and foster transparency and "long-termism" in financial and economic activity. EC has proposed an EU strategy on sustainable finance that outlines a roadmap, including the following actions, covering all relevant actors in the financial system:
- Establishing a common language for sustainable finance—that is, a unified EU classification system, or taxonomy, to define what is sustainable and identify areas where sustainable investment can make the biggest impact.
- Creating EU labels for green financial products on the basis of the EU classification system; this will allow investors to easily identify investments that comply with green or low-carbon criteria.
- Clarifying the duty of asset managers and institutional investors to take sustainability into account in the investment process and enhance disclosure requirements.
- Requiring insurance and investment firms to advise clients on the basis of their preferences on sustainability.
- Incorporating sustainability in prudential requirements for banks and insurers. Also, exploring the feasibility of re-calibrating capital requirements for banks (the so-called green supporting factor) for sustainable investments, when it is justified from a risk perspective, while ensuring that financial stability is safeguarded.
- Enhancing transparency in corporate reporting via a proposal to revise the guidelines on non-financial information to further align the guidelines with the recommendations of the FSB Task Force on Climate-Related Financial Disclosures, or TCFD.
Keywords: Europe, EU, Banking, Securities, Insurance, Sustainable Finance, Action Plan, EC
Previous ArticleChina Banking Insurance Regulatory Commission Replaces CBRC and CIRC
HKMA announced the publication of a report on fintech adoption and innovation in the banking industry in Hong Kong.
BIS published a working paper that examines the drivers of cyber risk, especially in context of the cloud services.
ECB launched consultation on a guide specifying how the Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy.
ECB published an opinion (CON/2020/16) on amendments to the prudential framework in EU in response to the COVID-19 pandemic.
EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD).
SRB published the final Minimum Requirements for Own Funds and Eligible Liabilities (MREL) policy under the Banking Package.
EIOPA published its risk dashboard based on Solvency II data from the fourth quarter of 2019.
MNB published a statement on loan payments post the announced moratorium, in addition to a set of new questions and answers (Q&A) on supervisory measures and requirements announced amid COVID-19 pandemic.
EBA updated the Single Rulebook question and answer (Q&A) tool for banks.
US Agencies (FDIC, FED, and OCC) published an interim final rule that temporarily revises the supplementary leverage ratio calculation for depository institutions.