The European Banking Authority (“EBA“) has published a letter it sent to the European Commission (“the Commission“) on 15 July, in which it says the European Supervisory Authorities (“ESAs“) welcome the Commission’s consultation on a Renewed Sustainable Finance Strategy as part of its European Green Deal.
In its letter, the EBA confirms that the ESAs support the Commission’s ambition to strengthen the European policy framework to enhance the resilience of the financial sector to environmental, social and governance (“ESG“) risks and facilitate the transformation towards a more sustainable economy.
The letter recognises that significant progress has already been made through the Commission’s action plan on financing sustainable growth, including the EU Taxonomy Regulation and the Regulation on sustainability-related disclosures in the financial services sector.
That said, the EBA outlines the following topics which, in its view, are particularly important to further bolster Europe’s future Sustainable Finance Strategy:
- Ensuring high-quality, user-friendly sustainability data which will support better disclosures – the EBA believes this would contribute to putting sustainability at the forefront in the financial sector, as well as supporting investment, lending and insurance decisions in the transition towards a more sustainable financial system.
- Supporting a more robust and proportionate regulatory framework to promote efficient risk management and a long-term perspective in financial decision-making – robust corporate governance arrangements that support a sound risk management and risk culture, as well as an effective strategy setting and oversight by management bodies are, the EBA says, key to ensuring a more forward-looking perspective.
- Ensuring that investors and consumers can buy and use sustainable financial products in a safe and transparent way – the ESAs recognise the importance of both promoting transparency and oversight on ESG-related aspects, and to the role of ESG ratings, ESG benchmarks and ecolabels.
The EBA concludes its letter by highlighting that while much can be achieved at EU level, both financial markets and sustainability challenges are by their nature global, and global approaches are therefore needed.