Update

Sustainable Finance

Cannot read this email? Open in your browser.June 2019

Sustainable Finance Update

June 2019

 
 
 

What to expect on Sustainable Finance 2019-2024

 
 
 

Check out the highlights of our joint event with the EPC on how sustainability can be integrated into the EU financial agenda.

 
 
 
 
 

Climate-related disclosures: do they fit the EU agenda?

 
 
 

Join our breakfast discussion on 4 July with the EC and other stakeholders to share further insights on climate-related reporting.

 
 
 
 

Highlights

 
 
 
 

  • Commission launches its supplementary guidelines for climate-related reporting
  • Technical Expert Group on Sustainable Finance issues reports on taxonomy, EU Green Bond Standard and benchmarks
  • ESMA seeks evidence for potential undue short-term pressure on corporate reporting

 
 
 
 
 

Feature story

 
 
 
 

Technical Expert Group on Sustainable Finance issues reports on three important initiatives: taxonomy, EU Green Bond Standard and benchmarks

On 18 June, TEG on Sustainable Finance delivered a pack of reports on sustainable finance. TEG mandate was extended till end of 2019 to continue working on taxonomy and benchmarks, but also assist the Commission with the EU Green Bond Standard and the ways it can be taken forward.

Further to that, on 24 June the Commission organised a stakeholders’ dialogue that attracted an impressive number of stakeholders to discuss with the TEG members recently issued reports.

Taxonomy

The taxonomy (see here) is supposed to help investors and companies make informed investment decisions on environmentally friendly activities. The report now focuses on the activities that make a substantial contribution to climate change mitigation and adaptation and it will be developed gradually. It is accompanied by a user guide which provides an overview of what taxonomy is and how to use it in practice. Stakeholders will have an opportunity to provide feedback on the report starting early July.

EU Green Bond Standard

TEG issued its final recommendations to the Commission on the establishment of a voluntary EU Green Bond Standard. There is strong focus on reporting requirements and verification. It is recommended to establish an accreditation regime for external verifiers. The TEG will further work on the suggested interim system for approved verifiers before the accreditation regime is in place.

Benchmarks

TEG proposes minimum standards for methodologies of the two newly introduced benchmarks: EU Climate Agreement and Paris-Aligned which are supposed to address the risk of greenwashing.

Stakeholders are invited to provide their feedback until 2 August. Read more

 
 
 
 
 

EU Developments

 
 
 
 

Sustainability is the key word in the programme of the Finnish Presidency

On 26 June, Finland published its Council presidency programme for the next six months ‘Sustainable Europe – Sustainable Future’.

Sustainability is placed at the core of all EU action. Also, the intention is to raise the EU profile as a global leader in climate action. Read more

Commission launches guidelines on climate-related disclosures

On 18 June, the European Commission launched guidelines to help companies improve their climate-related reporting. These supplement guidelines integrate the TCFD recommendations and provide information on how to report the impact of business activities on the environment and vice-versa – the impact of climate change on the business. Also, the guidelines take into account the upcoming taxonomy. Read more

EU leaders fail to agree on the date for climate neutrality

On 20 June, EU leaders did not agree on the date for achieving a climate neutrality in EU. MSs dependent on coal (Poland, Hungary, Czech Republic and Estonia) were not convinced they would receive sufficient assistance in this transition, the main concern being the costs of the transition to climate neutral economy and the potential impact of their competitiveness. Read more

ESMA seeks evidence on potential short-term pressure on corporations by the financial sector

On 24 June, the European Securities and Markets Authority published a consultation seeking to gather evidence on potential short-term pressure on corporations coming from the financial sector as part of the Action Plan on Sustainable Finance. The aim is to identify areas in which existing rules might contribute to mitigating undue short-term pressure but also the areas where the rules add to it. ESMA seeks input on six areas: investment strategy and horizon; ESG disclosures and their contribution to the long-term strategies; the role of fair value in better investment decision-making; institutional investors’ engagement; renumeration of fund managers and corporate executives; use of credit default swaps. Read more

EIOPA seeks feedback on its opinion on integrating sustainability in Solvency II

On 3 June, the European Insurance and Occupational Pensions Authority launched a consultation on a draft opinion on sustainability within Solvency II. This is part of EIOPA’s strategic priorities in Sustainable Finance and also a follow up to the Commission’s call for opinion (which was part of the Action Plan). The opinion addresses the valuation of assets and liabilities, assesses current investment and underwriting practices and seeks to contribute to the integration of sustainability risks in market risks and natural catastrophe underwriting risks for the solvency capital requirements for standard formula and internal model users.

European Court of Auditors conducts a rapid case review on sustainability reporting

On 12 June, the European Court of Auditors launched a rapid case review which looks into the SDGs reporting practices by the individual EU institutions and agencies. The review reveals that the European Investment Bank and the European Union Intellectual Property Office publish sustainability reports. Sustainability reporting is currently not integrated into the Commission’s performance framework. Read more

 
 
 
 
 

International Developments

 
 
 
 

IOSCO issues a final report on sustainable finance in emerging markets

On 5 June, the International Organisation of Securities Commissions issued a final report on the sustainable finance in the emerging markets. The report provides an overview of regulatory initiatives in emerging markets, market trends, but also ten recommendations, to mention a few: integration of the ESG-specific issues in overall risk assessment and governance, ESG-specific disclosures, reporting and data quality, etc. Read more

TCFD issues a status report: climate-related financial information is not sufficient for investors

TCFD published its second status report on the uptake of the recommendations for climate-related financial disclosures.

Key takeaways: disclosures are increasing, but they are still not sufficient for investors; more clarity is needed on potential financial impact of climate-related on companies; companies do not disclose information on the resilience of their strategies when using scenarios; mainstreaming climate-related issues requires the involvement of multiple functions. Read more

 
 
 
 
 

Other news

 
 
Environmental Finance
 
  ESMA urges EU Commission to increase sustainability regulation  
 
European Central Bank
 
  We need to ensure resilience to climate-change risk  
 
AFEP
 
  10 initiatives for an attractive competitive and sustainable Europe  
 
CDSB
 
  CDBS seeks view on the TCFD implementation Guide  
 
 
 

Events

 
 
17/07/2019
 
  CDSB webinar: review of the TCFD status report  
 
25/07/2019
 
  CDSB webinar: how the new EU guidelines on reporting climate-related information will impact your business  
 

This curated content was brought to you by Vita Ramanauskaité, Accountancy Europe senior policy advisor since 2015. You can send her tips by email, follow her on Twitter and connect with her on LinkedIn.

 
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