Today's sustainable finance proposals from the European Commission would encourage more sustainable investments. The proposals are the first steps towards implementing some of the recommendations of the EU's High-Level Expert Group on sustainable finance.
One proposal would require investors to ask for their clients' environmental and social preferences and act upon them, which for WWF is an important development. The Commission puts forward a specific proposal on low carbon indices - which would allow investors to be sure that their money is going into specifically low emissions stocks - but stops short, for now, of requiring investors to disclose whether the large 'business as usual' indices they use align with the Paris Agreement.
Green investments would also now be tracked, based on a list - put forward in another Commission proposal on 'taxonomy' - of what is considered 'environmentally-friendly'. This is another welcome measure. WWF is also calling for a 'brown' taxonomy to be added over time, to clarify what unsustainable investments are, as recently called for by the French central bank. Doing so would provide a fuller picture of the investments being made.
Sébastien Godinot, Economist at WWF European Policy Office said:
"Today's proposals by the Commission will strengthen the market for sustainable finance, despite some limitations. The ball's now in the court of MEPs and Member States to support, strengthen and turn the planned laws into a tool for consumers to re-direct their money into sustainable assets and avoid those which harm the planet."
The proposal on investor duties will now be discussed in the European Parliament and in Council, with the aim to finalise it at the latest by the 2019 EU elections.
For the EU sustainable taxonomy, the Commission will select a Technical Expert Group in the coming weeks that will develop it. It will start publishing parts of the taxonomy in the beginning of 2019.
Sébastien Godinot, Economist, WWF European Policy Office
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Sarah Azau, Senior Communications Officer, WWF European Policy Office
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