The European Commission published three reports in June by the Technical Expert Group (TEG) on Sustainable Finance which have wide-ranging implications for Ireland, the EU and the impact of sustainable finance worldwide.
The first report, on a classification system – or taxonomy – for environmentally-sustainable economic activities, “aims to provide practical guidance for policy makers, industry and investors on how best to support and invest in economic activities that contribute to achieving a climate neutral economy”.
The second expert report recommends clear and comparable criteria for issuing green bonds under an EU Green Bond Standard. By linking it to taxonomy, the standard will determine which climate and environmentally-friendly activities should be eligible for funding via an EU green bond. The Commission expects this to allow investors to scale up sustainable and green investment thereby boosting the green bond market.
The third report – on EU climate benchmarks and benchmarks’ environmental, social and governance (ESG) disclosures – sets out the methodology and minimum technical requirements for indices that will allow investors to orient the choice of investors who wish to adopt a climate-conscious investment strategy and address the risk of greenwashing. It also sets out disclosure requirements by benchmark providers in relation to ESG factors and their alignment with the Paris agreement.
The reports are intended to create the right framework for sustainable finance to flourish. The TEG, of which UCD Smurfit School’s Prof Andreas Hoepner is a member, began its work in July last year and has had its mandate extended until year-end 2019.
Ireland, which has adopted sustainable finance as a key pillar of government strategy for financial services and which hosts the UN Financial Centres for Sustainability Network (UNFC4S) European node, has welcomed the report.