Friends of the
Earth Europe, ActionAid and Global Witness have welcomed the EU's latest action on sustainable finance, but warned that tougher action is needed
to ensure that Europe's financial sector includes robust regulatory safeguards.
there are some positive proposals in this report, it is significantly less ambitious
than we had hoped," explains Anne van Schaik of Friends of the Earth
Europe. "It is disappointing to see the perpetuation of voluntary
instruments in the face of decades of failing investor self-regulation. Strong
legislation, including transparent due diligence and accountability mechanisms,
is the only way to ensure that Europe's finance and investment industries
reconnect to the real economy, to the benefit of citizens, the environment and
report from the European Commission's High Level Expert Group on Sustainable
Finance is an important step forward for Europe to direct capital flows towards
sustainable development", said Rachel Owens from Global Witness. "However,
regulations are urgently required to prevent the financial sector from
investing in projects which cause harm, for example contributing to climate
change, land grabbing and human rights violations".
would immediately impact families across Africa and Asia who are now being
forced off their land – for projects backed by money from European investors.
Companies looking to invest in land and natural resources rely on finance and
loans from the financial institutions we in the EU invest in. However, with few
rules in place to regulate those institutions, there is little to stop them
financing projects that are socially or environmentally damaging.
The global NGOs
particularly welcomed the report's recommendations for:
- reorienting the
financial system from short-term profit maximisation to long-term impact,
founded on the Paris Climate Change Agreement and Sustainable Development
- introducing a
common classification framework for sustainable finance which includes
broad social and environmental concerns;
- requiring that
investor duties give greater focus to Environmental, Social and Governance
(ESG) factors and extend the time horizons of their asset management,
across the entire investment chain;
sustainability within the mandate of Supervisory Authorities, including in
long-term risk monitoring;
investment performance indicators for social factors which build on
international human rights law, consider their impact on growing
inequalities, and are integrated within existing EU financial legislation.
report marks only the beginning of Europe's roadmap to a sustainable finance
future", said Isabelle
Brachet of ActionAid. "The onus now lies on the Commission to
urgently implement and go beyond its recommendations, by adopting robust legislation
that ensures that the financial industry required to exercise due diligence to
avoid environmental, social and governance harm."