Sustainable finance is the application of the concept of sustainable development to financial activity. Therefore, sustainable finance aims to create value in the long term by directing capital towards activities that, in addition to generating economic surplus value, are also useful to society and not borne by the environmental system.
In March 2018, the European Commission published a "Sustainable Finance Action Plan", outlining the strategy and measures to be taken to establish a financial system capable of promoting development that is genuinely sustainable from an economic, social and environmental point of view, by contributing to the implementation of the Paris Agreement on climate change and the United Nations 2030 Agenda for Sustainable Development.
In implementing this Action Plan, the European Commission has proposed an EU sustainable finance strategy with a roadmap outlining future work and initiatives involving all the stakeholders in the financial system. In particular, on 24 May 2018, the European Commission adopted a set of legislative proposals. The package contains: a proposal for a regulation introducing new disclosure requirements for intermediaries on how "sustainability factors" are integrated into investment decisions and advice; a proposal for a regulation to classify eco-sustainable activities, i.e. a shared system for the classification and certification of products and services considered sustainable and capable of reducing the risk of unfair practices (greenwashing); a proposal to amend Regulation (EU) 2016/1011 introducing two new benchmarks taking into account certain aspects of environmental sustainability; draft amendments to delegated acts adopted for the implementation of MiFID II (Directive 2014/65/EU) and IDD (Directive (EU) 2016/97), which require intermediaries to compulsorily take account of customer preferences for ESG factors in the provision of investment services and the distribution of IBIPs, including in relation to the suitability assessment.
Negotiations were concluded with regard to the regulation on sustainability reporting in the financial services sector and to the regulation on benchmarks, which were published in the Official Journal of the European Union on 9 December 2019.
With reference to the Classification Regulation, a political agreement was reached on 17 December 2019, during the trilogue on the final compromise text, which was ratified by ECOFIN on 18 February 2020 and is awaiting publication in the Official Journal of the European Union. The proposal for a regulation containing targeted and timely amendments to the delegated regulations implementing MIFID II and IDD for the integration of ESG factors in the area of customer disclosure and suitability assessment is also awaiting publication in the Official Journal of the European Union.
At the same time, in addition to the measures described above, the European Commission deemed it appropriate to incorporate the reference to ESG risks and sustainability factors in the processes and decisions of operators subject to UCITS, AIFMD, MiFID II, IDD and Solvency II. In this regard, on 30 April 2019, the ESMA published two pieces of technical advice, one on integrating sustainable finance into the MiFID II framework on investment services, the other on the UCITS and AIFM frameworks, which are necessary to amend the relevant delegated acts.
Furthermore, the European Commission requested each of the three ESAs to gather evidence and issue advice on undue pressure from the financial sector to short-termism that could lead to overlooking long-term risks and opportunities, including those related to climate change and other sustainability factors. In this respect, the ESMA published its advice in which it provides some initial policy recommendations.
Finally, on 11 December 2019 the European Commission adopted the European Green Deal, a "strategy" consisting of a series of measures - including in particular new legislation and investments - to make energy production and the way of life of European citizens more sustainable and less harmful to the environment.
2. Useful documentation
- Codice Corporate Governance 2020
- Report osservatorio DNF 2019
- Slide della Prof. Avv. Anna Genovese - Evoluzione del quadro regolatorio in tema di finanza sostenibile - Prime evidenze CONSOB sulle dichiarazioni non finanziarie (19 June 2018)
- Intervento della Prof. Avv. Anna Genovese - L'opzione regolatoria in tema di finanza sostenibile e prime evidenze della vigilanza Consob sulle dichiarazioni non finanziarie (25 October 2018)
- Report Iosco on Suistainable Finance (April 2020)
- Press Release ECB of 20 May 2020 - ECB launches public consultation on its guide on climate-related and environmental risks
3. Ongoing consultations and open hearings
- ESAs announce public hearing on ESG disclosures (ESAs press release of 9 june 2020)
- Joint ESA consultation on ESG disclosures (JC 2020 16 - 23 April 2020 / 1 September 2020)
- Commissione europea - Consultation on the renewed sustainable finance strategy (8 April 2020 / 15 July 2020)
- Commissione europea - Non-financial reporting by large companies (updated rules) - 20 February 2020 / 11 June 2020
- Esma - Consultation paper on integrating sustainability risks and factors in MIFID II (Esma 35-43-1210 - 19 June 2018 / 19 February 2019)
- Esma - Consultation paper on integrating sustainability risks and factors in the UCITS Directive and AIFMD (Esma 34-45-569 - 19 December 2018 / 19 February 2019)
- Eiopa - Consultation paper on on technical advice on the integration of sustainability risks and factors in the delegated actsunder Solvency II and IDD (EIOPA-BoS-18/483 - 26 November 2018 / 30 January 2019)