EC hosted a high-level conference on its strategy to reform the financial system in support of the climate and sustainable development agenda of EU. The event was jointly hosted in Brussels by the EC President Jean-Claude Juncker and the EC Vice President Valdis Dombrovskis. Putting into practice the EC Action Plan on Sustainable Finance was a key topic of discussion.
The Action Plan, which was launched on March 08, is part of the efforts of the Capital Markets Union to connect finance with the needs of the European economy. It is also one of the key steps toward implementing the historic Paris Agreement and the EU implementation of the 2030 Agenda for Sustainable Development. Key features of the Action Plan are as follows:
- Establishing 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 this 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. EC will explore 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. EC is proposing to revise the guidelines on non-financial information to further align them with the recommendations of the FSB's Task Force on Climate-Related Financial Disclosures (TCFD).
The EC Vice President said: "We will ensure a swift follow-up to our Action Plan on sustainable finance: As I mentioned, the first legislative proposals are due already in May. And we are in the middle of setting up a technical expert group to help develop key functions, such as the first taxonomies, the green bond standard, and climate-related metrics for disclosure. We are also considering establishing a longer term governance structure, by way of a platform composed of relevant stakeholders. But sustainable finance will only work as a shared effort. All players in the finance value chain—everybody in this room—will need to play an active role in its implementation. We also need to get the international community fully on board. Finance is global and interconnected, so sustainable finance must be too. The EU stands ready to promote our action plan at the highest level internationally."
Keywords: Europe, EU, Securities, Banking, Insurance, Action Plan, Sustainable Finance, Capital Markets Union, EC
Previous ArticleBank of Italy Updates the Handbook on AnaCredit Reporting
MAS and Temasek jointly released a report to mark the successful conclusion of the fifth and final phase of Project Ubin, which focused on building a blockchain-based multi-currency payments network prototype.
PRA published a public working draft, or PWD, of version 1.2.0 of the BoE Insurance XBRL taxonomy, along with the related technical artefacts.
CPMI published a report that sets out nineteen building blocks for a global roadmap to improve cross-border payments.
EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.
APRA updated the lists of the Direct to APRA (D2A) validation rules for authorized deposit-taking institutions, insurers, and superannuation entities.
PRA updated the statement that provides guidance to regulated firms on implementation of the EBA guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis.
EBA updated the 2019 list of closely correlated currencies that was originally published in December 2013.
ESMA published the final report on the guidelines on securitization repository data completeness and consistency thresholds.
FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).
APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.