Measures aim to establish consistent criteria for sustainable investments, as well as clear market standards for investors.

By Paul A. Davies and Aaron E. Franklin

Overview

The European Commission (EC) has set out its first proposal for “concrete actions” to help the EU financial sector take the lead in establishing a greener economy and supporting the Paris Agreement. These legislative proposals, which were published on 24 May 2018, follow the release of the EC’s Action Plan on sustainable finance on 8 March 2018 (more information on the Action Plan is available in this Latham blog post).

If the changes are adopted, they would be implemented through a series of delegated acts to establish the environmental taxonomy, followed by a fitness check of EU legislation on public corporate reporting and amendments to non-binding guidelines on non-financial reporting. The EC would also adopt a prospectus for green bond issuances and would publish a comprehensive study on sustainability ratings and research. Finally, the EC would create ecolabels for financial products and explore possible measures to see how climate and environmental risks can be incorporated into banks’ risk management policies aligning with the EU taxonomy.