AFME welcomes the Sustainable Finance package recently published by the European Commission

AFME has shown its support for the Sustainable Finance package recently released by the EC. The package comprises various key elements aimed at promoting sustainable finance. Here is a summary of those elements:
– Regulation of ESG ratings providers: The proposal seeks to improve the credibility, transparency, responsibility, governance, and independence of ESG rating activities. It establishes conditions for offering ESG ratings in the EU, principles for reliability and integrity, transparency requirements, and obligations regarding the independence and avoidance of conflicts of interest for ESG rating providers. It also grants supervisory powers to ESMA over ESG rating providers.
– Expansion of the EU Taxonomy: The final Delegated Act incorporates additional environmental criteria and expands the EU Taxonomy. It introduces technical screening criteria for economic activities that contribute to the remaining environmental objectives. It also includes targeted amendments to reporting requirements and expands the criteria for climate change mitigation and adaptation.
– Communication on the EU sustainable finance regulatory framework: This document takes stock of the progress made and highlights the EC’s efforts to improve the usability and effectiveness of the sustainable finance framework. It acknowledges challenges in implementation but asserts that the framework is starting to function as intended.
– Staff Working Document on the usability of the EU Taxonomy: The document provides an overview of measures and tools to address concerns and implementation issues related to the EU Taxonomy’s usability. The EC’s priority is to assist market participants in implementing the Taxonomy and enhancing its usability.
– Recommendation on transition finance: This Recommendation recognizes the significance of transition finance in achieving the EU’s climate and environmental goals. It defines transition finance and recommends approaches utilizing sustainable finance tools and disclosures, such as the EU Taxonomy, transition plans, EU climate benchmarks, and science-based targets. It also suggests actions for issuers, financial intermediaries, Member States, and ESAs to monitor and supervise the risks associated with greenwashing.
AFME appreciates the EC’s attention to usability and implementation challenges and recognizes the importance of promoting both green finance and transition finance to meet climate and environmental objectives. The organization looks forward to continuing its contribution to this important work.