bl-evolution : Sustainable Finance: what is the takeaway from the HLEG report?
The High-Level Expert Group on Sustainable Finance (HLEG), submitted its final report on sustainable finance on Wednesday 31 January. The 20-member group of experts from civil society, the financial sector and academia, established by the European Commission in December 2016, has released a series of recommendations setting out a comprehensive strategy on sustainable finance in the European Union.
The proposals will be integrated in the European financial policy framework in order to "speed up funding for a low-carbon and inclusive economy " and "to preserve the stability of the financial system by assessing potential risks such as climate change in the economy and finance," explains Christian Thimann, Chairman of the High-level Expert Group (HLEG). The document will serve as a roadmap for Brussels when it presents its plan of action to the Union of Capital Markets (UMC) in March 2018.
Main recommendations of the HLEG
The financial sector has a key role to play in achieving the set objectives of the Paris Agreement on climate change and the European Union’s 2030 Agenda for Sustainable Development. In the report, the HLEG lists the challenges facing the EU as it develops a sustainable finance policy.
It suggests, among other things, establishing a classification system, or a form of "Taxonomy", to clarify the market on what is considered "sustainable", clarifying investor duties in helping to achieve a more sustainable financial system, upgrading disclosure by financial institutions and businesses on the ways in which sustainability is factored into their decision-making, developing a European label for green investment funds, integrating sustainability in the mandates of European supervision authorities (AES) and establishing a European standard for green bonds.
The HLEG also recommends supporting the growth of social enterprises and funding of projects on social issues, revaluing environmental and natural capital in economic and financial decisions, re-orienting agriculture to make it more sustainable for the economy, the environment and public health.
Recommendations on biodiversity
The evolution of B&L supports the HLEG’s proposals that fall in line with long term objectives especially regarding measures to promote biodiversity.
Our societies depend on various natural resources including renewable and non-renewable resources (water, land, air, biodiversity, forests, soils) which provide many "benefits" which are also known as ecosystem services. Human activity places tremendous pressure on biodiversity which is receding as the ecosystem deteriorates. Pollution (water, air…), wastage and overconsumption are examples of the unsustainable management of the natural resources on which our economies depend. Our ecological footprint exceeded global limits 2 decades ago.
To address these impacts, the HLEG recommends, for example, facilitating access to resources and fostering investments in these natural resources, encouraging sustainable infrastructure in Europe to include ongoing projects that provide solutions to environmental challenges, supporting the development and use of methods to measure, draft and manage risks and opportunities in the framework of decision-making of financial institutions or exploring ways of using the framework to set general science based targets (SBTI).