Sustainable finance is the application of the concept of sustainable development to financial activity. The aim of sustainable finance, therefore, is the creation of value in the long run, directing capital towards activities that not only generate economic surplus value but, at the same time, are useful to society and not charged to the environmental system.

In March 2018, the European Commission published an "Action Plan for sustainable finance", defining the strategy for the creation of a financial system for the promotion of sustainable development from an economic, social and environmental point of view, which may help the implementation of the Paris Agreement on Climate Change and the United Nations 2030 Agenda for Sustainable Development. This strategy was subsequently upgraded with the publication, in July 2021, of the Strategy for Financing the Transition to a Sustainable Economy, following the adoption by the European Commission of the European Green Deal in June 2019.

In implementation of the above mentioned strategy for sustainable finance, on a proposal from the European Commission, the European legislators have adopted some legislative acts, which constitute the main elements of the European regulatory framework on sustainable finance. In particular the following acts: Regulation (EU) 2020/852 ("Taxonomy Regulation") published on 22 June 2020 which governs a taxonomy of eco-sustainable activities, i.e. a shared system at European level for the classification of eco-sustainable economic activities due to their contribution to the achievement of specific environmental goals, based on scientific criteria and metrics; Regulation (EU) 2019/2088 ("Disclosure Regulation"), published on 19 December 2019 and directly applicable in the EU from 10 March 2021, which introduces new disclosure transparency obligations on sustainability for certain types of intermediaries, on the methods adopted for integrating the "sustainability factors" into investment decisions and consultancy activities; Regulation (EU) 2019/2089 published on 9 December 2019, amending Regulation (EU) 2016/1011 ("Benchmark Regulation") and introducing two new categories of benchmarks that take into account some aspects of environmental sustainability.

Furthermore, again in implementation of the strategy on sustainable finance, the European Commission published on 2 August 2021 some delegated acts to amend the implementing provisions of the regulations about MiFID II (Directive 2014/65/EU), IDD (Directive 2016/97/EU), UCITS (Directive 2014/91/EU) and AIFMD (Directive 2011/61/EU), in order to favor the integration of sustainability profiles in the processes of intermediaries, in the processes of product governance, as well as customer preferences for ESG factors in the provision of investment services and in the distribution of IBIPs, including in relation to the adequacy assessment.

In addition, the European Commission continues the process of adopting level 2 measures in implementation of the regulatory acts described above, with a view to the completion of the reference regulatory framework on sustainable finance. In this sense, it must be mentioned the latest publication on 25 July 2022 of the Delegated Regulation (EU) 2022/1288 of the EC, containing technical standards for the implementation of the Disclosure Regulation, directly applicable in the European Union starting from 1 January 2023, through which numerous level 1 provisions have been specified with regard to the contents, methodologies and methods of representing the information that financial market participants and financial advisors are required to publish.

The reference regulatory framework on sustainability is, however, still in an evolutionary phase. In fact, in the perspective of the implementation of the other measures envisaged in the EU strategy on sustainable finance, the EC has presented further regulatory proposals, currently under negotiation, between the European Parliament and the EU Council. That concerns, in particular:

• the review process, not yet fulfilled, of Directive 2014/95/EU about non-financial reporting (NFS), through the proposal of a Directive of the European Parliament and of the Council on corporate communication on sustainability of 21 April 2021. On this proposal, aimed at significantly modifying the sustainability reporting discipline, an agreement was recently reached between the two co-legislators, and its definitive adoption is expected by the end of 2022;
• the proposal for a regulation on European green bonds of 6 July 2021 (European Green Bond Standard - EU GBS) aiming to facilitate and support the development of the green bond market, defining a high-level brand to which European and third-country entities might be able to voluntarily submit themselves in the case of a green bond issuance;
• the proposal for a directive on corporate sustainability due diligence, of 23 February 2022, which intends to introduce due diligence obligations for certain business categories with respect to current or potential negative impacts on human rights and environment deriving from their activities, from the activities of the subsidiaries and companies included in the value chain.

Apart from the legislative measures which have been already mentioned, once more on the basis of the Commission's Action Plan, ESMA approved and published, on 18 July 2019, its Guidelines on "Disclosure Requirements Applicable to Credit Ratings". These Guidelines also concern the criteria by which transparency must be given to ESG factors, if they constitute key elements at the basis of credit ratings, according to the methodology adopted by a specific rating agency. Furthermore, the EC carried out a targeted consultation in the period April-June 2022 in order to acquire relevant elements regarding: a) a possible initiative (legislative or non-legislative) to strengthen the reliability and comparability of ESG ratings; b) a possible targeted review of the legal framework relating to credit rating agencies or the adoption of non-legislative measures for the enhancement of transparency regarding the consideration of ESG factors in credit ratings. The elements collected during the targeted consultation under examination, as well as during a contextual and similar public consultation, are instrumental to the evaluation of possible initiatives (legislative and non-legislative) that the EC should propose in the first quarter of 2023.