The High-Level Expert Group on Sustainable Finance, established by the European Commission, has published its first report setting out concrete steps to create a financial system that supports sustainable investments.

The Commission will explore some key early recommendations to take further steps towards a low carbon, more resource-efficient and sustainable economy.

The report is part of broader efforts to map out an EU strategy on sustainable finance, a priority action of the Capital Markets Union (CMU) Action Plan. The first wave of EU reforms focused on making the financial system more stable and resilient. The Commission is now driving forward efforts to reorient the financial system so that it can support long-term, sustainable growth.

Launching the report, the European Commission said:

“The financial sector has a vital role to play in reaching the climate change goals of the Paris Agreement and the EU's 2030 Agenda for sustainable development. It is also vital that more private capital is mobilised towards green and sustainable investment so as to enable the transition to a low-carbon economy."

Jyrki Katainen, Vice-President responsible for Jobs, Growth, Investment and Competitiveness added:

"Mobilising finance from investors oriented to the long-term and from capital markets is vital for the transition to a low-carbon, more resource-efficient and sustainable economy. We know that investments of around €180 billion per year are needed to deliver on the EU's ambitious climate and energy goals. The High-Level Expert Group's report complements our efforts made in that direction under other parts of the Investment Plan for Europe, notably the European Fund for Strategic Investments." 

The interim report by the High-Level Group maps out the challenges and opportunities that the EU faces in developing a sustainable finance policy agenda, identifying possible areas of reform in financial policy. It also presents a first set of early recommendations to the Commission. The expert group will further explore other policy areas to provide further recommendations in the final report, due at the end of 2017.

The areas on which the interim report proposes quick action include a classification system for sustainable assets, a European standard and label for green bonds, fiduciary duty that encompasses sustainability, better disclosure from financial institutions and companies on how sustainability is factored into decision-making and a 'sustainability test' for relevant EU financial legislation. The Commission said it will now start exploring the early recommendations.

The interim report will be discussed at a public hearing next week in Brussels on sustainable finance organised by the Commission and will be accompanied by a public consultation that will help the group’s analysis and shape its policy recommendations.

The High-Level Group was established in December 2016 as part of the Commission's commitment to the Paris Climate Agreement. The Group has taken into account relevant work on climate, environmental and sustainable finance, such as the Guidelines on non-financial reporting adopted by the European Commission in June 2017 and the final recommendations report published by the industry-led Task Force on Climate-related Financial Disclosures (TCFD) on 29 June 2017.