WWF: “The EU’s Renewed Sustainable Finance Strategy largely fails to put words into action”


The European Commission has released three documents yesterday that aim to bring the EU financial system more in line with the EU Green Deal. While some steps forward are taken, each document has weaknesses says WWF.

The Commission published: 

  • A Renewed Sustainable Finance Strategy, which is the outcome of a mid-term review of the EU’s 2018 sustainable finance Action Plan. It is expected to support the EU Green Deal and the climate agenda.
  • A legislative proposal for an EU Green Bond Standard. The EU Green Bond Standard aims to provide a common EU framework and set the minimum standards for the European green bond market.
  • Rules setting out what businesses will be required to disclose exactly in terms of their alignment with the EU sustainable taxonomy, known as the Article 8 Delegated Act of the taxonomy regulation.

Renewed Sustainable Finance Strategy

WWF welcomes several positive steps such as supervision for banks and insurers, mandatory climate scenario testing, reinforcing science-based target setting, plans for minimum requirements for ESG products and revising the Prospectus Regulation. 

However, it is unclear whether capital requirements for banks and insurers will be modified to capture high-carbon related financial risks. Urging companies to set sustainability targets should be included in the forthcoming Sustainable Corporate Governance file but is not; and there is no clear commitment for regulating ESG rating agencies despite strong public calls from financial regulators such as ESMA in Europe, AMF in France and even IOSCO globally.

WWF is concerned about how and when the Commission’s commitments in the Strategy will be implemented. If the Commission is serious about tackling climate change and biodiversity loss, the actions committed to in the Strategy will often have to be completed by legislative changes with an ambitious timeline for their implementation.

Sébastien Godinot, Economist at WWF European Policy Office, said: “There are several steps forward in the Strategy, for example on supervision of banks and insurers, and on giving more attention to biodiversity. But several critical pieces of the puzzle are missing: legislative proposals and an ambitious timeline for their implementation in 2022-2023 must become the Commission’s priority to ensure the Strategy achieves its goal.” 

“We are highly concerned that the Commission could potentially include fossil gas in the green taxonomy. This is going against the recent International Energy Agency Net Zero report, which says that there is no room for new gas to reach the 1.5°C target. The Commission said itself that the EU needs to cut gas consumption by 35% by 2030 to meet its 55% climate target. This would be a heavy blow to the credibility of the EU taxonomy, the EU Green Deal and the EU’s global climate leadership. ”

Article 8 Taxonomy disclosure Delegated Act (DA)

WWF welcomes the Commission’s Delegated Act, and we find positive that it is largely aligned with the European financial Supervisory Authorities’ proposal – for example, in requiring the use of a standardised template – which we agree with overall. If the Commission wants to keep its ambitions high, the Delegated Act should also be consistent with the recently published Corporate Sustainability Reporting Directive

However, we believe that the 30 June 2024 disclosure deadline for SMEs is far too late and should be brought forward to 2023. The Commission should be more inclusive towards SMEs by providing them with the necessary resources in order to comply with various disclosure requirements. 

In addition, the review to include public exposures to central governments and central banks by 30 June 2024 only is also too late and should be shortened to 2023. Time is of the essence and the EU should act accordingly. 

Julia Linares, Senior Sustainable Finance Policy Officer, said: “SMEs are at the heart of the EU economy, and there is a risk they will be left behind in the green transition. On corporate disclosure requirements, for example, the Commission needs to raise the bar and include at least SMEs in high-risk sectors (like fossil fuels) in the scope of the requirements, while giving them the necessary support and resources to comply.”

Legislative proposal for an EU Green Bond Standard

The EU Green Bond Standard proposal rightly plans supervision by the European Securities and Markets Authority (ESMA), as recommended by the EU Commission’s Technical Expert Group, which WWF was part of. The Standard will rely on the EU taxonomy to define what is “green”: the scientific credibility of the EU taxonomy will determine the reliability of the Standard. The current good practice in the market is that fossil gas and nuclear are never part of green bonds.

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