The EU has a chance to become a world-leader in sustainable finance with the European Commission's upcoming Action Plan, expected on 7 March. This would mean more money going into 'green' sectors and less into fossil fuels and areas which damage the planet and people's wellbeing.
For this to happen, the European Commission must commit in the Action Plan to reviewing or creating several pieces of financial legislation. These must cover issues such as mandatory disclosure of the climate impacts of retail funds and mainstream indices (like the FTSE 100).
Sébastien Godinot, Economist at WWF European Policy Office said:
"How money is spent has a huge impact on our planet. So we will be watching tomorrow to see whether the EU's action plan on sustainable finance lives up to its name. Notably, we need transparency on how EU private investments impact our planet and if they fuel climate change.
"If the European Commission includes mandatory climate disclosure in its Action Plan, and follows the other key recommendations made by its advisory group in January - like making sustainability something all investors must take into account, and producing an EU classification of sustainable sectors - the stage will be set for the transformation of Europe's financial systems", added Godinot. "This could lead to billions of euros worth of environmentally friendly investments in Europe."
WWF asks the European Commission to include in its Sustainable Finance Action Plan:
- EU mandatory climate disclosure for retail funds and mainstream benchmarks (such as MSCI World) and for companies and financial institutions;
- Integration of sustainability into EU investor duties;
- Integration of sustainability into EU financial supervisors' (ESAs) mandates, and ESAs to provide guidance to financial institutions on how to use climate scenarios;
- European standards for green bonds and labels, building on an EU sustainability taxonomy - a classification system of sustainable sectors;
- Investment advisers required to ask about and respond to sustainability preferences of retail clients.