The financial industry plays a key role in promoting sustainable growth and climate neutrality in the EU. The EU has therefore initiated a “Financing of Sustainable Growth” action plan with the following overarching goals:
1. Redirecting capital flows:
Capital flows are to be re-orientated towards a more sustainable economy.
2. Risk management
Accounting for, controlling and pricing financial risks arising from climate change, natural catastrophes, destruction of the environment and social problems.
3. Sustainable economy:
Fostering of transparency and long-termism.
This generates the following areas of action:
- Inclusion of ESG criteria (Environmental, Social, Governance) in decision-making in the financial sector
- These ESG criteria must be clearly defined to provide basis for sustainable entrepreneurial action
- Transparency about the nature and degree of entrepreneurial sustainability
The Disclosure Regulation, the Taxonomy Regulatione form the fundamental basis.
Establishing a standard classification system for sustainable economic activities, thereby determining criteria which facilitate classifying such economic activities in environmental terms.
Commitment of financial market participants to provide transparent information on whether and in what form sustainability factors have integrated into investment decisions. This applies i.a. to corporate and product strategies, investment and risk processes and the remuneration strategy.