Valdis Dombrovskis of EC Speaks on Action Plan on Sustainable Finance
Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, Financial Stability, and Financial Services, spoke on the topic “Greening finance for sustainable business.” He highlighted that the Action Plan on sustainable finance will be presented in March next year.
Mr. Dombrovskis stated that a comprehensive Action Plan to lay the foundations for sustainable and green finance to reach its true potential will be presented next year. He noted that the work related to the Action Plan will be in the following three directions:
- First, it will be proposed to integrate sustainability factors into investment mandates. This means these criteria will be reflected in the duties that asset managers and institutional investors have toward those whose money they manage. This would clarify their legal obligation to factor sustainability risks into capital allocation decisions.
- Second, investors need a common language and classification system for what is considered green and sustainable. The goal is to have an EU taxonomy—or a classification system—for sustainable finance. This is a necessary condition for sustainable finance to reach scale. And it would allow to define EU standards and labels for Green Bonds and Green Investment Funds. This would also further allow to address market fragmentation and accelerate green investments by all types of investors.
- Third, European banks play a major role in financing the economy. To incentivize lending, the EP proposes to amend capital charges for banks to boost green investments and loans by introducing a so-called green supporting factor. This could be done at the first stage by lowering capital requirements for certain climate-friendly investments, such as energy-efficient mortgages.
Valdis Dombrovskis of EC concluded that, “To continue this discussion, the Commission will be organizing a high level conference on 22 March next year, focused on the role of financial services in the transition to a sustainable economy. This will also be an occasion to present out Action Plan on Sustainable Finance. I believe it will be another proof of Europe's ambition to take the global lead on sustainable finance.”
Related Link: Speech
Keywords: Europe, EU, Banking, Sustainable Finance, Action Plan, Green Finance, EC
Previous Article
ESRB Working Paper on Syndicated Loans and CDS PositioningRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
