Published on 08 June 2017


Europe seeks to align finance with 2°C warming goal

The European Commission's High-Level Expert Group on Sustainable Finance works actively on an initial set of recommendations, to be presented in an interim report in mid-July. A few days earlier, the Task Force on Climate-related Financial Disclosures, established by the Financial Stability Board, prepares to present its final report ahead of the G20 summit on 7–8 July 2017. These two initiatives have a common objective: transform the financial system to make it compatible with a +2°C world.

Meeting of the Group of Experts on Sustainable Finance at the European Commission

Never has a group been so active within the European Commission, according to insiders in Brussels. The High-Level Expert Group (HLEG)* on Sustainable Finance, launched by the European Commission last October, assembled for the fourth time on 7–8 June to finalise the drafting of its initial recommendations. An interim report will be made public on 18 July. The final report is expected at the end of the year.

The aim is to “develop a financial system that takes sustainability into account and contributes to the fight against climate change in order to meet the European Union's environmental and social objectives,” says Philippe Zaouati, CEO of Mirova and a member of the HLEG.       

Fifteen proposals on the table

The European Commission's financial markets body has asked the expert group to answer three questions: What is a sustainable financial system? How should sustainability criteria be incorporated into European regulations? And what can be done to mobilise greater capital flows toward a low-carbon society?

“Currently, there are about 15 proposals on the table,” reveals Pascal Canfin, head of WWF-France and a member of the expert group. “The interim report will present those with the broadest consensus. Later on, we may bring in voting to order to reach agreement. For example, one of the topics of debate is whether indexes like the CAC 40 should be required to measure their carbon footprint.”                  

“Once the report is published, in addition to the adoption of the recommendations by the member states, we will need strong commitment from the entire industry,” adds Christian Thimann, Group Head of Regulation, Sustainability and Insurance Foresight at Axa, Chair of the European High-Level Expert Group and Vice Chair of the Task Force on Climate-related Financial Disclosures (TCFD).

Moving forward without the US regulator

The specialised task force on climate reporting was launched in late 2015 by the G20's Financial Stability Board. It issued 11 recommendations that were meant to be adopted by the G20 finance ministers in March. Theoretically this remains on the agenda for the G20 meeting of state and governments heads on 7–8 July. However, Donald Trump's announcement that the United States would withdraw from the Paris Agreement has changed the situation dramatically.  

“We're no longer expecting much from the G20,” admits Christian Thimann. “We believe it would be more effective for us to appeal to companies directly, bypassing the regulators, in order to continue making progress and avoid losing momentum.” “The TCFD's recommendations can be endorsed by a G16 or G17,” Pascal Canfin remains hopeful.  

The HLEG has also hailed the 8 June publication of the EU's Capital Markets Union (CMU) mid-term review. The initiative, begun in September 2015, will offer companies an alternative to bank loans through the equity and bond markets. “[The review] is a significant step forward to create a more sustainable financial system, which will support the transition to a low-carbon, more resource-efficient and sustainable economy,” writes the HLEG.  

* Anne-Catherine Husson-Traore, CEO of Novethic, is one of the 20 members

Concepcion Alvarez @conce1

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