AFME report highlights room for improvement in EU sustainable finance regulation

AFME has recently published a comprehensive report titled “Sustainable Finance in the EU: Priorities to unlock financing and investment.“ This report sheds light on the existing challenges within the EU’s sustainable finance framework and proposes key recommendations to enhance its efficacy.
The report starts by acknowledging the progress made in establishing the EU sustainable finance regulatory framework. However, it emphasizes that despite the application of key regulations and ongoing implementations, there remain impediments hindering the full potential of channeling investments towards sustainability objectives. Oliver Moullin, Managing Director of Sustainable Finance at AFME, notes that while considerable strides have been made, challenges in policy clarity and regulatory framework persist, limiting the ability to mobilize investments effectively.
The identified challenges encompass various aspects, including a lack of clarity on real economy transition, insufficient high-quality data for sustainable finance tools, difficulties in applying the EU taxonomy, and concerns about greenwashing. In response to these challenges, AFME proposes five priority recommendations aimed at policymakers. These recommendations stress the importance of maintaining a focus on establishing roadmaps, reducing regulatory barriers, ensuring coherence and usability, providing a stable regulatory framework, and enhancing international coordination.
The report not only addresses regulatory framework improvements, but also underscores three crucial priorities for EU policymakers: facilitating transition finance, developing carbon markets, and scaling finance for nature. AFME urges policymakers to prioritize the real economy transition, evaluate and enhance the regulatory framework, and promote investment without adversely impacting competitiveness.
The report concludes with detailed policy recommendations, urging action on challenges such as ESG data availability, the usability of the EU taxonomy, streamlining financial sector reporting, ensuring coherence in transition planning requirements, and addressing the risk of greenwashing. Ultimately, AFME’s overarching objective is to support the EU’s sustainability goals and encourage the mobilization of private capital for sustainable finance. The recommendations collectively aim to create a regulatory environment that fosters effective financing for the transition to a sustainable and resilient economy.