On 08 April 2020 the European Commission published a consultation on its forthcoming Renewed Sustainable Finance Action Plan [link]. The updated Commission action plan comes as a follow-up to its initial 2018 Sustainable Finance Action Plan and is meant to broaden and deepen the EU sustainable finance regulatory framework. Building on from the legislative and regulatory initiatives in the 2018 Action Plan, the great majority of which is in place or due to be officially adopted, the European Commission is looking for ways to further develop its policy. Two ways that it has already indicated in previous statements are the establishment of an EU ecolabel for retail investment products and an EU green bond standard. Both of these initiatives would be based on the EU taxonomy for environmentally sustainable investments, which is awaiting final adoption and publication in the Official Journal of the European Union.

The Renewed Sustainable Finance Action Plan will predominantly focus on three areas:

  1. Strengthening the foundations for sustainable investment by creating an enabling framework, with appropriate tools and structures and to support financial and non-financial companies in laying their investment focuses increasingly on long-term development and sustainability-related challenges and opportunities.
  2. Increasing opportunities to have a positive impact on sustainability for citizens, financial institutions and corporates. This second pillar aims at maximising the impact of the EU frameworks and tools to create bigger incentives to make use of these;
  3. The full integration of climate and environmental risk into financial institutions and the financial system as a whole while ensuring that environmental and social risks  will further contribute to the greening of finance.

The consultation, which consists of 102 questions, considers a great number of subjects and issues in the field of sustainable finance. In particular, questions are included on the promotion of sustainable investment products to retail investors (questions 49 to 51 ) and the possibility of establishing a so-called brown category within the sustainable finance taxonomy, under which environmentally harmful activities would be grouped (questions 82 and 83). The Commission is also seeking stakeholder views on the usability of the sustainable finance taxonomy, as currently set out in the report of the Technical Expert Group on Sustainable Finance (questions 70 to 73).

The 14-week consultation is open for comments until 15 July 2020. The Commission will take the feedback received into account when articulating its final updated Sustainable Finance Action Plan, which it is planning to publish in Q3 2020.