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EC follows up on action plan on sustainable finance with first legislative proposals

  • European Union Image

28 May 2018

In January 2018, the High-Level Expert Group (HLEG) on Sustainable Finance, established by the European Commission (EC), published its final report setting out strategic recommendations for a financial system that supports sustainable investments. The EC reacted to the recommendations by publishing an action plan on sustainable finance in March. They have now followed up by publishing legislative proposals that aim at identifying which investments are sustainable.

The key features of the proposed measures aim at:

  1. a unified EU classification system setting harmonised criteria to determine whether an economic activity is environmentally sustainable;
  2. consistency and clarity on how institutional investors should integrate environmental, social and governance (ESG) factors in their investment decision-making process;
  3. benchmarks reflecting companies' carbon footprint and give investors greater information on an investment portfolio's carbon footprint; and
  4. better to advice to clients on sustainability.

As such, the proposals do not affect financial reporting yet, however, they aim at establishing a framework that can be used for judging whether the public reporting obligations including financial and non-financial reporting requirements for EU companies are meeting their objectives, which is the aim of the EU 'Fitness Check on the EU Framework for Public Reporting by Companies' (still open for comment until 21 July 2018).

The following information is available on the EC website:

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