Luxembourg has cautiously welcomed a new EU roadmap on sustainable finance.
The European Commission unveiled its strategy earlier this month for a financial system that supports the EU’s climate and sustainable development agenda.
The action plan, released on 8 March 2018, is the culmination of the year-long work of a high-level expert group set up to develop a comprehensive set of recommendations to support the financial sector in its transition to a low-carbon economy. The action plan has been welcomed by Luxembourg, with certain precisions.
The plan comprises six key elements:
Establish a common language for sustainable finance in the form of a unified EU classifications system that would define what is sustainable and identify high impact areas;
Create EU labels for green financial products on the basis of this classification system, thus allowing investors to clearly identify investments that comply with green or low-carbon criteria;
Clarify the duty of assets managers and institutional investors to take sustainability into account in the investment process and enhance disclosure requirements;
Require insurance companies and investment firms to advise on the basis of their preferences on sustainability;
Incorporate sustainability in prudential requirements; and
“Whilst we welcome the action plan, we believe that no specific legislative measures are needed to clarify asset managers’ duty to incorporate sustainability into the investment process.”
She warned that:
“A prescriptive approach to these issues is not required and may slow innovation and further development.”
A similar message came from Corinne Molitor, director of Innpact, specialists in impact investing. She very much supports the introduction of a quality label for sustainable investments on the condition that:
“The EU sets down a framework for quality labels but leaves the details to each individual member state to develop according to the needs and ambitions of their economy.”
Molitor also believes that a common EU classification system is vital. She told Delano in an interview on 15 March:
“Innpact welcome’s the introduction of a taxonomy. It is important to be clear about what is sustainable investment so that investors can see which companies have a good social and environmental impact that is measured throughout the investment’s lifecycle.”