Response to the European Commission’s proposals on sustainable finance

Created: 7 March 2019

We fully support the Commission’s Sustainable Finance proposals aimed at reorienting capital flows to sustainable investments and managing financial risk related to climate change, as well as fostering transparency and long-termism in financial and economic activity.

FESE members organise markets dedicated to sustainable finance and offer products that contribute:

– to sustainable development, facilitate management of climate risk;
– incorporate carbon reduction in investment strategies, and;
– allow the tracking of sustainable companies’ performance.

Moreover, they actively engage in the UN Sustainable Stock Exchanges initiative to promote sustainable capital markets, where companies are encouraged to perform greater disclosures of relevant ESG issues.

The Taxonomy Proposal

We support the creation of a taxonomy as this will favour both comparability and transparency by providing clarity on the activities that can be considered sustainable and, based on this, facilitate the determination of the degree to which assets are sustainable. A clearly defined taxonomy is a necessary starting point for other actions, such as standards and labels.

Read the full response here.

The Disclosure Proposal

Introducing harmonised rules on asset managers and insurance funds in respect of sustainability-related disclosures to end-investors as part of their investment advice processes is in our view a positive move. This framework would help transform Europe’s economy into a greener, more resilient and circular system. While FESE supports high-quality, comparable, consistent, investor-relevant disclosures by investee companies, we do not see how obligations designed for investment firms can be extended to the companies themselves, as this assessment should be done by financial intermediaries.

Read the full response here.

The Benchmarks Proposal

Whilst currently, there is a spectrum of low carbon benchmarks available to the market, consistently applied and clear definitions would be welcome. However, some adjustments could be made to the definitions and requirements in terms of transparency of methodology.

Read the full response here.