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.

The action plan recommends ten actions to be taken at European level to: (i) facilitate the channelling of financial investment towards a more sustainable economy; (ii) consider sustainability in risk management procedures and (iii) enhance transparency and long-term investment.

The Action Plan also refers to:

• improving the quality of non-financial reporting by companies. In this regard, on 20 June 2019 the European Commission published a supplement to the 2017 Non-binding Guidelines on non-financial information focused on climate issues. In addition, on 20 February 2020 the European Commission launched a public consultation to review Directive 2014/95/EU on non-financial reporting disclosures (NFRD), which will end on 14 May 2020;
• the need for institutional investors and asset managers to enhance sustainability factors in their investment decision-making and to tighten disclosure obligations;
• the integration of sustainability into awarded ratings and market research, as well as the analysis of existing practices of credit rating agencies concerning the use of ESG factors. In this regard, the ESMA approved and published its Guidelines on "Disclosure Requirements Applicable to Credit Ratings" concerning the disclosure of ESG factors where they are key elements underpinning credit ratings, and Technical Advice on analysing existing practices by credit rating agencies in order to integrate sustainability factors into their ratings;
• the integration of sustainability into the prudential requirements of credit institutions. Directive 2019/2034 and Regulation 2019/2033 amending CRD IV and Capital Requirements Regulation (CRR) were published. The Directive grants a mandate to the EBA to assess the potential inclusion of environmental, social and governance risks in the review and assessment carried out by competent authorities, as well as to report on introducing technical criteria for exposures related to activities that are substantially associated with ESG objectives for the supervisory review and assessment process. The Regulation grants a mandate to the EBA to develop technical standards for the disclosure of ESG risks, "physical risks" and "transition risks" by large listed credit institutions and to assess whether a prudential treatment dedicated to exposures related to activities that are substantially associated with environmental and/or social objectives is justified. Finally, the Commission will examine the feasibility of recalibrating banks' capital requirements for sustainable investments;
• the creation of EU labels for green financial products based on the EU classification scheme, allowing investors to easily identify investments that meet environmental or low-carbon criteria. In this regard, the work below is still underway: (a) the preparatory work to define a European Ecolabel for financial products launched at the end of 2018 and expected to be completed by the end of 2020; (b) the work by the group of experts on sustainable finance set up by the European Commission, relating to the definition of a common standard to identify the characteristics for a debt instrument to use the "green bond" name. To date, the expert group published a report entitled "EU Green Bond Standard" in June 2019, which proposes to the European Commission a standard for green bonds to which any issuer of bonds or other debt instruments can adhere on a voluntary basis.