On 6 July 2021, the European Union (EU) published its Strategy for Financing the Transition to a Sustainable Economy, showcasing the areas of key development since the Action Plan for Financing Sustainable Growth was published in March 2018.
The publication establishes the strategic priorities and next steps in terms of both legislative and non-legislative actions in the EU with a clear aim to support the EU Green Deal and the path to a carbon-neutral Europe by 2050.
The key elements include:
- Financing the transition of the real economy towards sustainability: focusing on expanding the EU Taxonomy framework, including for the recognition of transition efforts
- A more inclusive sustainable finance framework: supporting and empowering citizens, retail investors and SMEs
- Improving the financial sector’s resilience and contribution to sustainability: the double materiality perspective – reflecting outside-in and inside-out ESG risks at all levels
- Fostering global ambition: promoting international consensus, deepening the work of the IPSF and supporting third countries’ transition efforts
These recommendations are further narrowed down to a set of six Actions, with 21 concrete deliverables, both regulatory and non-regulatory, covering in detail the topics highlighted above.
The timing of the EU strategy could not be better, coming at a critical moment in terms of global public and private sector engagement ahead of November’s Climate COP26. At UNEP FI – a partnership between UNEP and the global financial sector to mobilize private sector finance for sustainable development – we welcome the leadership of the EU on Sustainable Finance and see it as a complementary effort to reach global goals such as the UN’s Sustainable Development Goals and a net-zero economy by 2050. The regulatory and voluntary efforts to integrate sustainability into financial institutions led by the EU are setting an example to the rest of the world and we expect to see EU policy reflected in global discussions and spilling over to other regions and jurisdictions.
UNEP’s Executive Director, Inger Andersen said:
“Sustainability is not an “either” “or” option. It is the only way forward as we decarbonise and move to a net-zero future. Good to see the EU strategy for financing the transition to sustainability.”
Antoni Ballabriga, Head of Responsible Business at BBVA, Co-Chair of UNEP FI’s Global Steering Committee said:
“The EC’s Strategy for Financing the Transition to a Sustainable Economy is a solid step forward in the right direction. The ambition of the European Union on sustainable finance, grounded by the landmark Action Plan for Financing Sustainable Growth in 2018 which put the region at the front of the pack, is now solidified by the pace of change in the last years, and the direction of travel outlined in the strategy. European financial institutions involved in the work of UNEP FI are supportive of the EU’s agenda. We especially welcome the support of the transition of the whole economy, improving the financial sector’s resilience and contribution to sustainability and fostering global ambition. We aim to continue reflecting the strategy in our global actions. Leadership can start from a regional basis, like the one we are committed to continue delivering in Europe, but delivery at a global scale needs action at all levels.”
The conclusion of the strategy reads:
“[This Strategy] builds on the Commission’s collaboration and partnerships with external private and public initiatives to foster financial sector leadership towards achieving EU sustainability goals. […]. The Commission calls on all relevant stakeholders, from central banks and supervisors to Member States, citizens, local authorities and financial and non-financial companies, to take action in their respective areas and maximise the impact of this strategy.”
At UNEP FI, we are committed to driving forward the sustainable finance agenda and we echo these words as a call for action and collaboration in Europe and beyond. Read more.
UNEP FI is hosting a webinar with the European Commission, who will be presenting their latest updates on the strategy. Register here.