22 March 2018: Participants at a high-level conference discussed opportunities to reform the financial system in support of the EU climate and sustainable development agenda. The conference was organized by the European Commission (EC) and aimed to build on the momentum from the One Planet Summit, hosted by President Macron of France in December 2017. Participants focused on how to implement the Commission’s Action Plan on Sustainable Finance.

The Action Plan on Sustainable Finance, launched on 8 March 2018, presents a ten-point strategy to connect finance with sustainability, and is part of the Capital Markets Union’s (CMU) efforts to connect finance with the specific needs of the European economy. The Action Plan represents a step towards implementation of the Paris Agreement on climate change and the EU’s implementation of the 2030 Agenda for Sustainable Development. The Action Plan seeks to: establish a unified EU classification system to define a common language for sustainable finance, and identify areas where sustainable investment can make the biggest impact; create EU labels for green financial products to enable investors to identify investments that comply with low-carbon or green criteria; and enhance transparency in corporate reporting by revising the guidelines on non-financial information to align them with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). The Action Plan also addresses sustainability in investment processes, disclosure requirements and prudential requirements, among other areas.

The High-Level Conference on Financing Sustainable Growth convened in Brussels, Belgium, on 22 March 2018. In opening remarks, EC Vice-President Valdis Dombrovskis said the financing gap to achieve EU climate and energy targets is estimated at €180 billion annually. He stressed sustainable finance as critical in supporting the EU’s long-term competitiveness and growth, and highlighted opportunities to move to an EU economy based around low-carbon technology and resource efficiency.

Juncker said the EC will work with the UN, the G7 and the G20 to establish global sustainable finance standards.

In a keynote speech, EC President Jean-Claude Juncker reflected that, two decades ago, sustainability was a “specialist topic,” but today, it is a “daily reality and a priority” for governments, financial institutions, business and citizens. He called for rebuilding the link between “the world of finance and the needs of citizens and the real economy” by shifting the culture and structure of financial systems. Juncker said the EC will work with the UN, the Group of 7 (G7) and the Group of 20 (G20) to establish global sustainable finance standards.

The UN Secretary-General’s Special Envoy for Climate Action, Michael Bloomberg, highlighted capital markets as one of the most powerful tools in the fight against climate change, and stressed that US business leaders, governors, mayors and communities are taking action to address climate change. He described ‘America’s Pledge’ to fulfill the US commitment to the Paris Agreement, a coalition of groups that, if it were a country, would be the world’s third largest economy. Bloomberg also highlighted the Global Covenant, which includes more than 7,500 cities working to support local action on climate change.

The conference also addressed the proposed European Energy Union and the European Capital Markets Union. Juncker urged moving the proposed unions into legislation and implementation.

The first legislative proposals to follow up on the Action Plan on Sustainable Finance are expected to be produced by May 2018. [Conference Website] [EC Press Release] [EC Vice President Statement] [EC President Statement] [UN Secretary-General Special Envoy for Climate Action Statement] [Commission Action Plan on Sustainable Finance]