Experts recommend EU develop world’s most sustainable financial system
The growing realisation that there are no alternatives to sustainable development has spurred the European Union to take leadership in the green transition towards a low-carbon economy. The European Commission’s High-Level Expert Group (HLEG) on Sustainable Financing provided its final recommendations for a comprehensive EU strategy on sustainable finance on 31 January 2018.
“It has been very encouraging for the HLEG to note the Commission’s high expectations. I am hopeful that our final report meets those expectations, and that it can serve as a basis for meaningful impact in supporting the development of a sustainable financial market within the EU”, says Magnus Billing, CEO of the Swedish pension fund Alecta and member of the HLEG.
The HLEG has consisted of 20 leaders from civil society, the finance sector and academia. They have been supported by nine observer institutions, of which NIB is one. The HLEG has had eight meetings since it first convened in January 2017.
The HLEG has consisted of 20 leaders from civil society, the finance sector and academia. They have been supported by nine observer institutions, of which NIB is one. The HLEG has had eight meetings since it first convened in January 2017.
Reactions to some recommendations
As priority actions, the HLEG recommends establishing an EU sustainability taxonomy, starting with climate mitigation, in order to define areas where investments are needed the most. It also recommends developing official European sustainability standards for some financial assets, starting with green bonds.
Lars Eibeholm, Vice-President, Head of Treasury at NIB and observer to the HLEG, welcomes the two recommendations: “For NIB as an international financial institution with a specific mandate to enhance the environment, and as the biggest Nordic issuer of green bonds, this is a step in the right direction.”
“The recommendations bring clarity to the discussion of defining green and also raise the bar for issuing green bonds”, Mr Eibeholm says. “It is important to maintain the ‘greenness’ and to avoid ‘greenwashing’.”
Kivisaari says that the financial sector has come up with several initiatives for increasing sustainable financing, and that it is important that HLEG’s recommendations do not stop that.
“I believe that the HLEG report is important in stressing the need for definitions and taxonomies to help the financial sector and the ‘real’ economy work together”, Mr Kivisaari agrees.
Among others, the HLEG also recommends clarifying investor duties and to bring greater focus on environmental, social and governance factors into investment decisions.