The European Commission has today released its Action Plan for Financing Sustainable Growth, which will implement recommendations based on the EU High-Level Expert Group (HLEG) final report released last month.

It includes a comprehensive list of supportive tools and resources, such as: proposals for a taxonomy on climate change, environmentally and socially sustainable activities; standards and labels for sustainable financial products; support for sustainable infrastructure; mainstreaming ESG factors into market research and credit ratings; exploring how corporate governance can better enable sustainable finance; enhanced oversight of sustainability by the European Supervisory Authorities, and more.

Among the proposals particularly relevant to PRI signatories, the action plan proposes:

  • Clarifying institutional investors and asset managers’ duties – the commission proposes the introduction of primary legislation in Q2 2018. It aims to increase capital flows to ESG investments by ensuring that ESG factors are consistently considered by institutional investors and asset managers in investment processes, and to increase transparency about how investors are integrating sustainability factors into their processes.
  • Incorporating sustainability in suitability assessment of financial instruments and insurance products – the commission proposes the introduction of secondary legislation to amend MiFID II and IDD delegated acts for Q2 2018 to ensure that sustainability preferences are considered as part of suitability assessments. In addition, the commission will invite ESMA to include provisions sustainability in its guidelines for suitability assessments, also for publication by Q2 2018.
  • Increasing the transparency of sustainability benchmarks – the commission proposes the introduction of secondary legislation for Q2 2018 to improve the transparency of sustainability benchmarks, their methodology and features, which will build further on the work of the EU sustainability taxonomy.

The PRI was delighted to contribute to the EU HLEG as an observer, and to see many recommendations from the EU HLEG incorporated into this comprehensive plan. We warmly welcome the action plan and will continue to work with signatories and the European Commission to support its delivery.