The HLEG, in which the PRI participates as an international observer, was established in December 2016 and was tasked with advising the European Commission on a strategy to fully integrate sustainability into Europe’s system of financial regulation.
The group comprises 20 experts from the finance sector, civil society and academia.
The group’s final report was published today and can be read here.
The group was chaired by Axa’s Christian Thimann and has the support of Valdis Dombrovskis, European Commission Vice President for Financial Stability, Financial Service and the Capital Markets Union and Jyrki Katainen, Vice President for Jobs, Growth, Investment and Competitiveness.
The report makes a series of recommendations to improve the contribution of the financial system to sustainable and inclusive growth. The priority recommendations are:
- Establish and maintain a common sustainability taxonomy at the EU level
- Clarify investor duties to better embrace long-term horizon and sustainability preferences
- Upgrade disclosure rules to make sustainability risks fully transparent, starting with climate change
- Key elements of a retail strategy on sustainable finance: investment advice, ecolabel and SRI minimum standards
- Develop and implement official European sustainability standards and labels, starting with green bonds
- Establish ‘Sustainable Infrastructure Europe’
- Governance and Leadership
- Include sustainability in the supervisory mandate of the ESAs and extend the horizon of risk monitoring
Nathan Fabian, PRI policy and research director said, “The HLEG recommendations set the backdrop for a realignment of Europe’s capital markets with sustainable development outcomes. I encourage PRI signatories to endorse the report and work with the Commission, PRI and others to support their implementation.”
The commission is already taking steps to realign Europe’s capital markets. Speaking at the Macron climate summit, Valdis Dombrovskis, the commission’s vice-president for financial services, said he wants to see sustainability factors embedded in investment mandates. Mr Dombrovskis’ comments follow on from the recently announced European Commission consultation on investor duties and sustainability, which is seen as an important step toward achieving a sustainable financial system for Europe.
Mr Fabian added, “Clarifying these duties will help institutional investors and asset managers allocate capital more efficiently by taking into account ESG risks and opportunities.”
The PRI is grateful for the leadership of Vice Presidents Dombrovskis and Katainen and the chairmanship of Christian Thimann. The PRI will be working with signatories and the European Commission, parliament and council to support the implementation of the group’s recommendations. To hear about our ongoing policy work – in Europe and beyond – you can subscribe to our monthly policy newsletter.