The EU sustainable finance landscape has witnessed a number of regulatory developments that indicate further progress toward a greener, more sustainable future for Europe.
The European Commission’s draft Commission Notice offers guidance on the reporting of Taxonomy-eligible and Taxonomy-aligned economic activities and assets, aimed at enhancing transparency and streamlining reporting processes for financial institutions. In parallel, the provisional agreement on the revision of the Energy Performance of Buildings Directive sets ambitious targets for the building sector, envisioning all new buildings to be zero-emission by 2030 and existing building stock to follow suit by 2050. These legislative updates underscore the EU’s commitment to fostering a more environmentally conscious built environment and accelerating the transition to greener infrastructure.
Moreover, insights from the Platform on Sustainable Finance shed light on emerging market practices, urging market participants to integrate sustainability considerations into banking products, enhance disclosure transparency, and raise awareness among SMEs and retail clients. Notably, the European Central Bank’s (ECB) climate and nature plan for 2024 and 2025 expands its focus on climate change, addressing transition risks, physical impacts, and risks stemming from nature loss and degradation.
These collective efforts signal a push towards a more resilient and sustainable financial ecosystem in Europe, aligning with broader climate objectives and reinforcing the importance of sustainable finance in driving meaningful change.
On 21 December 2023, the European Commission published a draft Commission Notice on the interpretation and implementation of certain legal provisions of the Disclosures Delegated Act under Article 8 of the EU Taxonomy Regulation on the reporting of Taxonomy-eligible and Taxonomy-aligned economic activities and assets.
The purpose of the Commission Notice is to provide further interpretative and implementation guidance to financial undertakings in the form of replies to Frequently Asked Questions (FAQs) on the reporting of their KPIs under the Disclosures Delegated Act.
The Council of the European Union and the European Parliament reached a deal, on 7 December 2023, on a proposal to revise the Energy Performance of Buildings Directive (EPBD).
This follows the submission of a proposal by the Commission to the European Parliament and the Council on 15 December 2021 for a recast of the EPBD. Since then, the Council and the Parliament engaged intensively in preparatory work involving the European Economic and Social Committee and European Committee of the Regions. The Committee on Industry, Research and Energy was appointed as the committee responsible for the proposal.
The revision aims to achieve zero-emissions for all new buildings by 2030, and to reach zero-emissions by 2050 for existing building stock.
On 30 January 2024, the European Central Bank (ECB) published its climate and nature plan for 2024 and 2025, taking stock of the progress made since the climate agenda of 2022.
According to the plan, the ECB will expand its work on climate change, identifying three focus areas:
A detailed overview of the planned work programme for 2024 and 2025 is available in the Annex released as part of the climate and nature plan.
On 29 January 2024, the Platform on Sustainable Finance published its report on “a compendium of market practices”.
The objective of the report is to consider how the EU sustainable finance framework can be used to support and inform the transition efforts of economic players, beyond mere regulatory compliance.
It presents a compendium of early practices, financial products, instruments, and initiatives that market participants are employing to transition their business models and investments.
The report includes peer-to-peer recommendations to encourage and accelerate the use of the EU sustainable finance framework. In particular, the credit institutions stakeholder group encourages peers to:
As we navigate towards a more sustainable financial ecosystem in Europe, these collective efforts underscore the importance of collaboration, transparency, and innovation. These three principles lie at the core of the ENGAGE for ESG initiative and shape the ENGAGE Consortium’s efforts to streamline the alignment of green mortgages and energy efficient home renovation loans with the most relevant European sustainability regulations through the ENGAGE Templates.
To achieve the proposed 55% emission reduction climate target by 2030, around EUR 275 billion of additional investments are needed per year.
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