COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN CENTRAL BANK, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Action Plan: Financing Sustainable Growth
Date: 2018-03-08
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: action programme, capital movement, classification, climate change policy, economic activity, environmental policy, financial risk, financing, investment, sustainable development

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 8.3.2018 COM(2018) 97 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN CENTRAL BANK, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Action Plan: Financing Sustainable Growth  
 
 
Setting the scene  

By  adopting  the  Paris  Agreement1  on  climate  change  and  the  UN  2030  Agenda  for  Sustainable 
Development2  in  2015,  governments  from  around  the  world  chose  a  more  sustainable  path  for  our 
planet  and  our  economy.  The  UN  2030  Agenda  has  at its  core  17  Sustainable  Development  Goals 
(SDGs).  Over  the  next  15  years,  these  goals  will  guide  us  in  preparing  for  a  future  that  ensures 
stability, a healthy planet, fair, inclusive and resilient societies and prosperous economies. The Paris 
Agreement,  signed  in  December  2015  by  195  countries,  is  the  first-ever  universal,  global  climate 
deal to adapt and build resilience to climate change and to limit global warming to well below 2°C.  

Sustainability and the transition to a low-carbon, more resource-efficient and circular economy are 
key in ensuring long-term competitiveness of the EU economy. Sustainability has long been at the 
heart  of  the  European  Union  project  and  the  EU  Treaties  give  recognition  to  its  social  and 
environmental  dimensions.3  The  EU  is  committed  to  development  that  meets  the  needs  of  present 
and  future  generations,  while  opening  up  new  employment  and  investment  opportunities  and 
ensuring  economic  growth.  Many  of  the  Commission’s  priorities4  for  2014-2020  feed  into  the 
Union's  energy  and  climate  goals  and  work  towards  implementing  the  UN  2030  Agenda  for 
Sustainable  Development.The  Commission  is  also  working  on  a  Reflection  Paper  'Towards  a 
Sustainable  Europe  by  2030'  and  has  launched  a  multi-stakeholder  platform  to  exchange  best 
practices on SDG implementation.  

As  we  are  increasingly  faced  with  the  catastrophic  and  unpredictable  consequences  of  climate 
change and resource  depletion, urgent action is needed to  adapt  public policies to  this  new reality. 
The financial system has a key role to play here. The financial system is being reformed to address 
the lessons of the financial crisis, and in this context it can be part of the solution towards a greener 
and more sustainable economy. Reorienting private capital to more sustainable investments requires 
a comprehensive shift in how the financial system works. This is necessary if the EU is to develop 
more  sustainable  economic  growth,  ensure  the  stability  of  the  financial  system,  and  foster  more 
transparency and long-termism in the economy. Such thinking is also at the core of the EU’s Capital 
Markets Union (CMU) project.5  

At the end of 2016, the Commission appointed a High-Level Expert Group on sustainable finance. 
On 31 January 2018, the expert group published its final report6 offering a comprehensive vision on 
how to build a sustainable finance strategy for the EU. The Report argues that sustainable finance is 
about two urgent imperatives: (1) improving the contribution of finance to sustainable and inclusive 
growth  by  funding  society's  long-term  needs;  (2)  strengthening  financial  stability  by  incorporating 
environmental,  social  and  governance  (ESG)  factors  into  investment  decision-making.  The  Report 
proposes eight key recommendations, several cross-cutting recommendations and actions targeted at 
specific sectors of the financial system. This Action Plan builds upon the group's recommendations 
to set out an EU strategy for sustainable finance.  

1 See conclusions agreed in December 2015 at http://unfccc.int/paris_agreement/items/9485.php 

2 https://sustainabledevelopment.un.org/post2015/transformingourworld 

3 See, among others, art. 3.3 of the Treaty on  the European Union (TEU) and the role of environmental and social issues in international cooperation (art. 21 TEU). 
4 These priorities include the Clean Air Policy Package (http://ec.europa.eu/environment/air/clean_air/index.htm), the Circular Economy Package 
(http://ec.europa.eu/environment/circular-economy/implementation_report.pdf), the Energy Union Strategy (http://eur-lex.europa.eu/resource.html?uri=cellar:1bd46c90-bdd4-11e4-bbe1-

01aa75ed71a1.0001.03/DOC_1&format=PDF) including the Clean Energy for All Europeans Package, the EU Strategy on Adaptation to Climate Change 

(https://ec.europa.eu/clima/policies/adaptation/what_en), the New Skills Agenda for Europe (http://eur-lex.europa.eu/legal-

content/EN/TXT/PDF/?uri=CELEX:52016DC0381&from=EN), the European Pillar of Social Rights (https://ec.europa.eu/commission/priorities/deeper-and-fairer-economic-and-

monetary-union/european-pillar-social-rights/european-pillar-social-rights-20-principles_en), the development of "blue economy financing principles" and the Investment Plan for Europe 

(https://ec.europa.eu/commission/priorities/jobs-growth-and-investment/investment-plan-europe-juncker-plan_en). 
5 https://ec.europa.eu/info/publications/mid-term-review-capital-markets-union-action-plan_en 
6 https://ec.europa.eu/info/publications/180131-sustainable-finance-report_en 

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1  Finance for a more sustainable world 

Finance supports the economy by providing funding for economic activities and ultimately jobs and 
growth.  Investment  decisions  are  typically  based  on  several  factors,  but  those  related  to 
environmental and social considerations are often not sufficiently taken into account, since such risks 
are likely to materialise over a longer time horizon. It is important to recognise that taking longer-
term  sustainability  interests  into  account  makes  economic  sense  and  does  not  necessarily  lead  to 
lower returns for investors. 

'Sustainable  finance'  generally  refers  to  the  process  of  taking  due  account  of  environmental  and 
social considerations in investment decision-making, leading to increased investments in longer-term 
and  sustainable  activities.  More  specifically,  environmental  considerations  refer  to  climate  change 
mitigation and adaptation, as  well as  the environment  more broadly7 and  related risks  (e.g. natural 
disasters8).  Social  considerations  may  refer  to  issues  of  inequality,  inclusiveness,  labour  relations, 
investment  in  human  capital  and  communities.  Environmental  and  social  considerations  are  often 
intertwined,  as  especially  climate  change  can  exacerbate  existing  systems  of  inequality.  The 
governance of public and private institutions, including management structures, employee relations 
and  executive  remuneration,  plays  a  fundamental  role  in  ensuring  the  inclusion  of  social  and 
environmental considerations in the decision-making process.9  

This Action Plan on sustainable finance is part of broader efforts to connect finance with the specific 
needs of the European and global economy for the benefit of the planet and our society. Specifically, 
this Action Plan aims to:  

1.  reorient  capital  flows  towards  sustainable  investment  in  order  to  achieve  sustainable  and 

inclusive growth; 

2.  manage  financial  risks  stemming  from  climate  change,  resource  depletion,  environmental 

degradation and social issues; and  

3.  foster transparency and long-termism in financial and economic activity. 

1.1

 Reorienting capital flows towards a more sustainable economy 

Current levels of investment are not sufficient to support an environmentally and socially sustainable 
economic system. Europe has to close a yearly investment gap of almost EUR 180 billion to achieve 
EU  climate  and  energy  targets  by  2030.10  According  to  estimates  from  the  European  Investment 
Bank (EIB), the overall investment gap in transport, energy and resource management infrastructure 
has  reached  an  astounding  yearly  figure  of  EUR  270  billion.11  A  lack  of  clarity  among  investors 
regarding  what  constitutes  a  sustainable  investment  is  a  contributing  factor  behind  this  investment 
gap and also an obstacle to financing the social infrastructure that is needed to address inequality and 
inclusiveness issues.  

Transforming  Europe's  economy  into  a  greener,  more  resilient  and  circular  system  will  not  just 
reduce our environmental footprint on the planet and address existing inequalities. It will also boost 
competitiveness  by  improving  the  efficiency  of  production  processes  and  reducing  the  costs  of 
accessing and managing resources.  

7 e.g. covering air and water pollution, resource depletion, and biodiversity loss. 
8 One of the four priorities for action under the Sendai Framework for Disaster Risk Reduction focuses on investing in disaster risk reduction for resilience. 
9 Governance is a tool to integrate environmental and social objectives in public and private investment decisions. For instance, executive compensation rules or incentives to protect 
shareholders' rights from managers are tools to ensure equality between the different stakeholders of a firm, i.e. managers, workers, shareholders and so on. In this case, in fighting 
inequality within a firm, governance performs a social goal.  
10 The estimate is an yearly average investment gap for the period 2021 to 2030, based on PRIMES model projections used by the European Commission in the Impact Assessment of the 
Proposal of the Energy Efficiency Directive (2016), http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1483696687107&uri=CELEX:52016SC0405.  
11 See EIB, 'Restoring EU competitiveness', 2016. The estimate, until 2020,  include investments in modernising transportation and logistics, upgrading energy networks, increasing 
energy savings, renewables, improving resource management, including water and waste. 

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The EU is committed to this transition and has pledged to make at least 20% of its budget directly 
climate-relevant.12 For instance, already in  2017, almost  one third of investments mobilised by the 
European  Fund  for  Strategic  Investments  (EFSI)  were  channelled  into  energy,  environment  and 
resource efficiency projects and social infrastructure. The EFSI 2.0 extends the fund until 2020 and 
raises investment targets to EUR 500 billion, with at least 40% of EFSI financing for infrastructure 
and  innovation  to  support  climate  action  projects.  But  clearly  further  steps  are  needed  to  channel 
even more investment into sustainable sectors.  

1.2

  Mainstreaming sustainability in risk management 

Including  environmental  and  social  goals  in  financial  decision-making  aims  to  limit  the  financial 
impact of environmental and social risks. For example, an increase in the world's temperature of 2 
degrees Celsius could have destabilising effects on Europe's economy and financial system.  

Environmental  and  climate  risks  are  currently  not  always  adequately  taken  into  account  by  the 
financial  sector.  The  increase  in  weather-related  natural  disasters  means  that  insurance  companies 
need  to  prepare  for  higher  costs.  Banks  will  also  be  exposed  to  greater  losses  due  to  the  lower 
profitability of companies most exposed to climate change or highly dependent on dwindling natural 
resources.  Between 2000 and 2016, annual weather-related disasters worldwide rose by 46%13 and 
between 2007 and 2016, economic losses from extreme weather worldwide rose by 86% (EUR 117 
billion in 2016).14 This is a worrying trend, since close to 50% of the exposure of Euro area banks to 
risk  is  directly  or  indirectly  linked  to  risks  stemming  from  climate  change.15  Other  environmental 
issues are increasingly acknowledged to threaten current business models.16 

Social  factors,  such  as  poor  working  conditions  and  growing  inequalities  can  have  concrete 
consequences  for  financial  institutions  including  legal  risks.  Companies  that,  for  example,  do  not 
adhere  to  international  labour  standards  will  find  their  reputation  damaged.  Legal  and  reputational 
damage  may  well  ultimately  lead  to  financial  losses.  Similarly,  growing  income  inequality  can 
hamper long-term, stable growth: research by the IMF has shown that rising inequality and fragile 
growth are linked.17  

1.3

 Fostering transparency and long-termism  

Transparency  of  market  participants'  activities  is  essential  to  a  well-functioning  financial  system. 
Corporate transparency on sustainability issues is a prerequisite to enable financial market actors to 
properly  assess  the  long-term  value  creation  of  companies  and  their  management  of  sustainability 
risks.  Corporate  reporting  is  ineffective  when  longer-term  risks  are  not  fully  transparent  and  thus 
cannot be taken into account. Corporate transparency on sustainability will not only inform market 
participants, but also help to steer companies in a more sustainable and long-term direction. 

Increased transparency, underpinned by innovative technologies, empowers citizens to compare the 
sustainability  performance  of  companies  and  allows  retail  investors  to  make  informed  investment 
decisions. In this context, the Commission welcomes and encourages private initiatives on disclosure 
that promote easily accessible information on sustainable finance.  

Sustainability  and  long-termism  go  hand  in  hand.  Long-termism  describes  the  practice  of  making 
decisions that have long-term objectives or consequences. Investments into environmental and social 
objectives  require  a  long-term  orientation.  However,  current  market  practices  often  focus  on 
producing high returns over a short timeframe. Therefore, a central focus of the sustainability agenda 

12 European Commission, Climate Action, https://ec.europa.eu/clima/policies/budget_en 
13 Lancet Report 2017, p.7.  
14 $ 129 billion, as for Lancet Report 2017; 14b Ostry et al, 2014: https://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf 
15 Battiston, S., A. Mandel, I. Monasterolo, F. Schutze, and G. Visentin, “A climate stresstest of the financial system,” Nat. Clim. Chang., vol. 7, no. 4, pp. 283–288, Apr. 2017. 
16 Both biodiversity loss and ecosystem collapse, and water scarcity, have been listed among the top ten global risks by World Economic Forum's 2018 Global Risks Report. 
17 Ostry et al, 2014: https://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf  

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is  to  reduce  the  undue  pressure  for  short-term  performance  in  financial  and  economic  decision-
making,  notably  by  increased  transparency,  so  that  investors,  whether  corporate  or  retail,  can  take 
better informed and more responsible investment decisions. 

2  Reorienting capital flows towards a more sustainable economy 

2.1

  A unified classification system for sustainable activities  

A  shift  of  capital  flows  towards  more  sustainable  economic  activities  has  to  be  underpinned  by  a 
shared understanding of what 'sustainable' means. A unified EU classification system - or taxonomy - 
will  provide  clarity  on  which  activities  can  be  considered  'sustainable'.  It  is  at  this  stage  the  most 
important  and  urgent  action  of  this  Action  Plan.  Clear  guidance  on  activities  qualifying  as 
contributing  to  climate  change  mitigation  and  adaptation,  environmental  and  social  objectives  will 
help  inform  investors.  It  will  provide  detailed  information  on  the  relevant  sectors  and  activities, 
based on screening criteria, thresholds and metrics. This is an essential step in supporting the flow of 
capital into sustainable sectors in need of financing. An EU taxonomy will be gradually integrated 
into EU legislation to provide more legal certainty.  

Due to the complexity and highly technical nature of developing such a classification system, it will 
take time to arrive at a fully-fledged EU sustainability taxonomy, covering climate, environment and 
social  aspects.  Furthermore,  ongoing  monitoring  will  be  necessary  in  light  of  evolving  EU  policy 
objectives  and  other  aspects,  such  as  market,  environmental  and  technological  developments. 
Therefore,  the  Commission  proposes  to  proceed  with  a  step-by-step  approach,  starting  with  a 
taxonomy on climate change mitigation and adaptation activities and some environmental activities. 
As a second step, the taxonomy will cover remaining environmental and social activities, recognising 
that one aspect of sustainability must not be detrimental to other related risks or objectives.  

Action 1: Establishing an EU classification system for sustainable activities 

1.  Subject  to  the  outcome  of  its  impact  assessment,  the  Commission  will  table  a  legislative 
proposal  in  Q2  2018  that  will  ensure  the  progressive  development  of  an  EU  taxonomy  for 
climate change, environmentally and socially sustainable activities, building on existing work, where 
relevant. The aim is to embed the future EU sustainability taxonomy in EU law and provide the basis 
for  using  such  a  classification  system  in  different  areas  (e.g.  standards,  labels,  green-supporting 
factor  for  prudential  requirements,  sustainability  benchmarks).  The  proposal  will  include  tools 
allowing such a classification system to be established and regularly updated. 

2. In addition, and as a first intermediate step, the Commission will set up a technical expert group 
on sustainable finance. The group will be asked, on the basis of broad consultation of all relevant 
stakeholders,  to  publish  a  report  providing  a  first  taxonomy  with  a  particular  focus  on  climate 
change mitigation activities by Q1 2019. This is to be extended to climate change adaptation and 
other  environmental  activities  by  Q2  2019.  These  reports  will  be  a  building  block  in  the 
Commission's progressive development of the EU sustainability taxonomy and will in the meantime 
be an initial point of reference for investment in climate change-related and environmental activities. 

2.2

 Standards and labels for sustainable financial products 

Building on the future EU sustainability taxonomy, EU standards and labels for sustainable financial 
products would protect the integrity of and trust in the sustainable financial market, as well as enable 
easier  access  for  investors  seeking  those  products.  For  instance,  green  bonds  allow  entities 
(companies,  banks,  governmental  organisations,  etc.)  to  borrow  money  from  investors  in  order  to 
finance  or  re-finance  'green'  projects,  assets  or  business  activities.  While  the  green  bond  market  is 

4 

 
 
 
expanding rapidly, it still accounts for less than 1% of total bonds outstanding worldwide.18 Drawing 
on  current  best  practices,  an  EU  standard  accessible  to  market  participants  would  facilitate 
channelling more investments into green projects and would constitute a basis for the development of 
reliable labelling of financial products.  

Labelling  schemes  can  be  particularly  useful  for  retail  investors  who  would  like  to  express  their 
investment  preferences  on  sustainable  activities.  They  could  facilitate  retail  investors'  choice  by 
gradually being integrated in tools, like comparison websites or financial planning services, currently 
developed  in  the  context  of  the  Commission's  Consumer  Financial  Services  Action  Plan.  Surveys 
suggest  that  retail  investors  increasingly  want  their  investments  to  take  into  account  climate, 
environmental  and  social  considerations.19  However,  the  lack  of  labelled  financial  products  may 
prevent  investors  from  directly  channelling  their  funds  into  sustainable  investments.  The 
Commission sees the potential merit in the use of the EU Ecolabel Regulation to create a voluntary 
EU-wide  labelling  scheme.  Criteria  would  have  to  be  identified  for  specific  financial  products 
offered  to  retail  investors  (such  as  Packaged  Retail  Investment  and  Insurance  Products).  The 
Commission  will  also  consider  the  merits  of  a  labelling  scheme  for  socially  responsible  financial 
products, such as SRI,20 building on the experience of the European Social Entrepreneurship Funds. 

Action 2: Creating standards and labels for green financial products 

1.  As  a  first  step,  the  Commission's  technical  expert  group  on  sustainable  finance  will  be 
responsible,  on  the  basis  of  the  results  of  a  public  consultation,  for  preparing  a  report  on  an  EU 
green bond standard by Q2 2019, building on current best practices. 
2.  Within  the  framework  of  the  Prospectus  Regulation,  the  Commission  will  specify  by  Q2  2019 
the  content  of  the  prospectus  for  green  bond  issuances  to  provide  potential  investors  with 
additional information.  
3.  The  Commission  will  explore  the  use  of  the  EU  Ecolabel  framework  for  certain  financial 
products, to be applied once the EU sustainability taxonomy is adopted. 

2.3

  Fostering investment in sustainable projects 

Mobilising private capital for sustainable projects, especially for infrastructure, is a prerequisite for 
the  transition  to  a  more  sustainable  economic  model.  According  to  the  OECD,  infrastructure 
contributes  to  about  60%  of  greenhouse  gas  emissions.21  Given  the  needs  for  sustainable 
infrastructure  investment,  continued  progress  in  developing  appropriate  frameworks  to  leverage 
private investment alongside public funds is key.  

The capacity to develop and implement projects, however, varies widely across the EU and between 
sectors. Greater advisory and technical assistance would contribute to a larger pipeline of sustainable 
projects.  Beyond  large-scale  infrastructure  projects,  the  clean  energy  transition  also  requires 
adequate finance available for smaller-scale, distributed projects.22 
In addition to grants,23 as part of the Investment Plan for Europe, the Commission has significantly 
boosted  its  financial  and  technical  support  for  sustainable  infrastructure  investment,  in  particular 
through  the  EFSI  and  the  European  Investment  Advisory  Hub.  The  EFSI  has  proven  to  be 

18 G20 Green Finance Study Group, G20 Green Finance Synthesis Report, 2016. 

19 Such as the French and SRI: Results of the 8th National Survey run by Ipsos for Vigeo Eiris and the FIR; Natixis Gobal Asset Management, “Mind Shift – Getting past the screens of 
responsible investing”, 2017; and Schroders, “Global perspectives on sustainable investing”, 2017. 
20 Socially responsible investment funds or Sustainable and responsible investment funds are funds integrating environmental, social and governance factors in their investment decision 
making process. 
21 OECD, Investing in Climate, Investing and Growth, 2017. 
22 This concerns particularly energy efficiency improvements, for example in buildings, and deployment of renewable energy. The Commission has proposed actions that stimulate such 
investments as part of the Clean Energy for all Europeans package. 
23 Such as the Connecting Europe Facility 

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instrumental  in  crowding  in  private  investment  for  strategic  projects  across  the  EU,  mobilising 
almost EUR 265 billion in total investments.24 Following its successful first years of operation, the 
EFSI has been recently extended until 2020 (EFSI 2.0) and its investment target has been raised to 
half a trillion euros. In addition, the EFSI 2.0 will focus even more on sustainable projects, with at 
least 40% of EFSI financing for infrastructure and innovation to support climate action projects. The 
European  Investment  Advisory  Hub,  the  EU's  gateway  for  investment  support,  will  also  provide 
greater  advisory  capacity  at  regional  and  local  level  to  promote  projects  with  a  climate, 
environmental and social impact.  

In  parallel,  the  roll-out  of  the  EU  External  Investment  Plan  (EIP)  will  encourage  sustainable 
investments  in  partner  countries,  starting  from  Africa  and  the  EU  Neighbourhood.  The  EIP  is 
expected to leverage more than €44 billion of investments by 2020, by mobilising public and private 
finance  through  the  European  Fund  for  Sustainable  Development  (EFSD),    providing  technical 
assistance  on  investment  projects,  and  fostering  a  favourable  investment  climate  and  business 
environment. Sustainable development is integrated into the design of the instrument and all projects 
will  have  a  clear  sustainability  dimension,  for  example  by  supporting  sustainable  agriculture  and 
connectivity, as well as the creation of decent jobs.  

For the post-2020 multiannual financial framework, the Commission has come forward with the idea 
of  establishing  a  single  investment  fund  integrating  all  EU  market-based  instruments  to  further 
increase the efficiency of EU investment support for discussion by the European Union's Leaders.25 
Building  on  the  successful  roll-out  of  the  EFSI,  such  a  fund  could  provide  financial  support  and 
related technical assistance to crowd in private investment, including for sustainable infrastructure. 
Backed by an EU budgetary guarantee, a single investment fund could support investment priorities 
and  simplify  interaction  between  investors,  beneficiaries,  the  EU  Commission,  implementing 
partners,  like  the  EIB  and  national  promotional  banks,  and  potential  new  partners,  such  as 
foundations and philanthropic organisations. As a continuation of the European Investment Advisory 
Hub,  such  support  could  also  include  a  project  development  assistance  component  to  continue  to 
build more capacity for developing sustainable projects. 

Action 3: Fostering investment in sustainable projects 

Building  on  the  ongoing  efforts  to  reinforce  advisory  capacity,  including  for  developing 
sustainable infrastructure projects, the Commission will take further measures that will improve 
the efficiency and impact of instruments aiming at sustainable investment support in the EU and in 
partner countries. 

2.4

  Sustainability considerations in financial advice 

By  providing  advice,  investment  firms  and  insurance  distributors  can  play  a  central  role  in 
reorienting  the  financial  system  towards  sustainability.  Prior  to  the  advisory  process,  these 
intermediaries  are  required  to  assess  clients'  investment  objectives  and  risk  tolerance  in  order  to 
recommend  suitable  financial  instruments  or  insurance  products.  However,  investors'  and 
beneficiaries' preferences as regards sustainability are often not sufficiently taken into account when 
advice is given.  

The Markets in Financial Instruments Directive (MiFID II) and the Insurance Distribution Directive 
(IDD)  require  investment  firms  and  insurance  distributors  to  offer  'suitable'  products  to  meet  their 
clients'  needs,  when  offering  advice.  For  this  reason,  those  firms  should  ask  about  their  clients' 
preferences (such as environmental, social and governance factors) and take them into account when 

24 As of February 2018. 

25 Communication from the Commission "A new, modern Multiannual Financial Framework for a European Union that delivers efficiently on its priorities post-2020" - The European 
Commission's contribution to the Informal Leaders' meeting on 23 February 2018. 

6 

 
 
                                                 
assessing the range  of financial instruments  and insurance products to be recommended, i.e. in the 
product selection process and suitability assessment.  

Action 4: Incorporating sustainability when providing financial advice   

Subject to  the outcome  of its impact assessment, the  Commission  will  amend the MiFID II and 
IDD delegated acts in Q2 2018 to ensure that sustainability preferences are taken into account in the 
suitability  assessment.  Based  on  these  delegated  acts,  the  Commission  will  invite  the  European 
Securities Markets Authority (ESMA) to include provisions on sustainability preferences in its 
guidelines on the suitability assessment to be updated by Q4 2018. 

2.5

  Sustainability benchmarks 

Benchmarks are indices that  play a central role in  the price formation  of financial instruments and 
other relevant assets in the financial system. Benchmarks are useful instruments for investors, as they 
allow to track and measure performance and allocate assets accordingly.  

Traditional  benchmarks  reflect  the  status  quo  and  their  methodologies,  as  a  result,  reflect 
sustainability  goals  only  to  a  limited  degree.  As  such,  they  are  not  appropriate  to  measure  the 
performance  of  sustainable  investments.  In  response,  index  providers  have  been  developing  ESG 
benchmarks  to  capture  sustainability  goals,  but  the  lack  of  transparency  regarding  their 
methodologies  has  affected  their  reliability.  More  transparent  and  sounder  sustainable  indices' 
methodologies  are  needed  to  reduce  greenwashing  risks.26  For  instance,  a  sound  methodology  for 
low carbon indices should reflect compatibility with the objectives of the Paris Agreement, in order 
to improve the performance assessment of low-carbon funds. 

Action 5: Developing sustainability benchmarks  

By  Q2  2018,  the  Commission  intends  to  (i)  adopt  delegated  acts,  within  the  framework  of  the 
Benchmark Regulation, on the transparency of the methodologies and features of benchmarks 
to  allow  users  to  better  assess  the  quality  of  sustainability  benchmarks;  and  (ii)  put  forward, 
subject  to  the  outcome  of  its  impact  assessment,  an  initiative  for  harmonising  benchmarks 
comprising low-carbon issuers, based on a sound methodology to calculate their carbon impact, to 
be  put  into  operation  once  the  climate  taxonomy  is  in  place.  The  Commission's  technical  expert 
group will, on the basis of consultation of all relevant stakeholders, publish a report on the design 
and methodology of the low-carbon benchmark by Q2 2019.  

3  Mainstreaming sustainability into risk management 

3.1

  Sustainability in market research and credit ratings  

In  recent  years,  market  research  providers  and  sustainability  rating  agencies  have  stepped  up  their 
efforts to assess companies’ environmental, social and governance performance  and their ability to 
manage sustainability risks. Such assessments contribute to a more sustainable allocation of capital 
and  improve  the  information  flow  between  issuers  and  investors.  The  lack  of  broadly-accepted 
market  standards  to  assess  companies’  sustainability  performance  makes  the  transparency  of  the 
methodology  used  by  research  providers  particularly  important.  Additionally,  some  stakeholders 
argue that the focus of sustainability research providers on very large issuers has a negative impact 
on the attractiveness of smaller issuers for institutional investors. 

Credit ratings are also an  important element of  well-functioning  financial markets, as  they provide 
investors with assessments of the creditworthiness of companies and public institutions. Credit rating 

26 The use of marketing to portray an organisation's products, activities or policies as environmentally friendly when they are not. 

7 

 
 
                                                 
agencies operate in a highly concentrated market and adopt their credit ratings based on the relevant 
available  information.  However,  it  remains  unclear  to  what  extent  sustainability  factors  are  being 
considered.  The  Commission  is  monitoring  developments  in  the  credit  rating  market  and 
acknowledges  the  need  for  greater  understanding  of  and  transparency  about  how  credit  rating 
agencies  take  sustainability  factors  into  account.  The  Commission  will  invite  ESMA  to  promote 
solutions which would ensure that credit rating agencies fully integrate sustainability and long-term 
risks.  The  Commission  will  also  continue  engaging  on  those  issues  with  all  relevant  stakeholders, 
including  as  regards  the  possible  emergence  of  new  credit  rating  agencies  that  would  meet  this 
objective. 

Action 6: Better integrating sustainability in ratings and market research  

1.  Starting in Q2  2018, the  Commission will  engage with all relevant stakeholders to  explore 
the merits of amending the Credit Rating Agency Regulation to mandate credit rating agencies to 
explicitly integrate sustainability factors into their assessments in a proportionate way to preserve 
market access for smaller players. Commission services will report on the progress made on this  
by Q3 2019. 

2.  The Commission invites ESMA to: (i) assess current practices in the credit rating market by Q2 
2019,  analysing  the  extent  to  which  environmental,  social  and  governance  considerations  are 
taken  into  account;  (ii)  include  environmental  and  social  sustainability  information  in  its 
guidelines on disclosure for credit rating agencies by Q2 2019 and consider additional guidelines 
or measures, where necessary. 

3.  The  Commission  will  carry  out  a  comprehensive  study  on  sustainability  ratings  and 
research  by  Q2  2019.  It  will  analyse  methodologies  and  explore  aspects  like  the  market 
structure  of  sustainability  ratings  and  market  research  services,  the  depth  and  breadth  of 
sustainability research assessments and scoring, and the independence of those research/scoring 
providers. The study will also explore possible measures to encourage sustainability ratings and 
market research.  

3.2

 Institutional investors' and asset managers' sustainability duties  
Several pieces of EU legislation27 require institutional investors and asset managers to act in the best 
interest  of  their  end-investors/beneficiaries.  This  is  commonly  referred  to  as  'fiduciary  duty'. 
However,  current  EU  rules  on  the  duty  of  institutional  investors  and  asset  managers  to  consider 
sustainability  factors  and  risks  in  the  investment  decision  process  are  neither  sufficiently  clear  nor 
consistent across sectors. 

Evidence suggests that institutional investors and asset managers still do not systematically consider 
sustainability  factors  and  risks  in  the  investment  process.  Also,  institutional  investors  and  asset 
managers  do  not  sufficiently  disclose  to  their  clients  if  and  how  they  consider  these  sustainability 
factors in their decision-making. End-investors may, therefore, not receive the full information they 
need, should they want to take into account sustainability-related issues in their investment decisions. 
As  a  result,  investors  do  not  sufficiently  take  into  account  the  impact  of  sustainability  risks  when 
assessing the performance of their investments over time.  

Action 7: Clarifying institutional investors' and asset managers' duties 

Subject to the outcome of its impact assessment, the Commission will table a legislative proposal 
to  clarify  institutional  investors'  and  asset  managers'  duties  in  relation  to  sustainability 
considerations by Q2 2018. The proposal will aim to (i) explicitly require institutional investors and 
asset managers to integrate sustainability considerations in the investment decision-making process 

27 Including Solvency II, IORP II, UCITS, AIFMD and MiFID II. 

8 

 
 
 
                                                 
and (ii) increase transparency towards end-investors on how they integrate such sustainability factors 
in their investment decisions, in particular as concerns their exposure to sustainability risks.  

3.3

  Prudential requirements for banks and insurance companies  

Banks,  insurance  companies  and  pension  funds  are  the  main  source  of  external  finance  for  the 
European  economy  and  an  important  channel  of  savings  for  investments.  As  a  result,  they  could 
provide  the  critical  mass  of  investments  needed  to  close  the  gap  for  the  transition  to  a  more 
sustainable economy. However, banks, insurance companies and pension funds may also be exposed 
to risks related to unsustainable economic development. For instance, some estimates suggest that at 
least  half  of  the  assets  of  banks  in  the  Euro  area28  are  currently  exposed to  climate  change-related 
risks. Such risks for financial stability have also been flagged by macro-prudential supervisors.29  

This calls for a better reflection of risks associated with climate and other environmental factors in 
prudential  regulation  with  a  careful  calibration  that  would  not  jeopardise  the  credibility  and 
effectiveness  of  the  current  EU  prudential  framework  and  its  risk-based  nature.  Building  on  the 
development  of  the  EU  sustainability  taxonomy,  the  Commission  will  assess  whether  more 
appropriate capital requirements could be adopted to better reflect the risk of sustainable assets held 
by banks and insurance companies. Such a supporting factor would need to be progressively phased 
in, as the EU taxonomy develops. For instance, in its calibration, the Commission will consider all 
the  available  evidence  on  the  link  between  energy  efficiency  savings  and  mortgage  loan 
performance.30 

Moreover, in its analysis of the Basel recommendations of December 2017, the Commission will pay 
particular attention to the possible negative impact on European bank lending, investment and other 
activities, which are critical for sustainable finance.  

Action 8: Incorporating sustainability in prudential requirements 

1.  The Commission will explore the feasibility of the inclusion of risks associated with climate 
and other environmental factors in institutions' risk management policies and the potential 
calibration of capital requirements of banks as part of the Capital Requirement Regulation 
and Directive. The aim would be to take into account such factors, where this is justified from a 
risk  perspective,  to  safeguard  the  coherence and  effectiveness  of  the  prudential  framework  and 
financial stability. Any recalibration of capital requirements, based on data and the assessment of 
the prudential risk of banks' exposures, would need to rely on and be coherent with the future EU 
taxonomy on sustainable activities (see Action 1).  

2.  In Q3 2018, the Commission will invite the European Insurance and Occupational Pensions 
Authority (EIOPA) to provide an opinion on the impact of prudential rules for insurance 
companies  on  sustainable  investments,  with  a  particular  focus  on  climate  change  mitigation. 
The Commission will take this opinion into account in the report to be submitted to the European 
Parliament and Council by 1 January 2021 under the Solvency II Directive.31 

4  Fostering transparency and long-termism  

4.1

  Disclosure and accounting  

Corporate reporting on sustainability issues enables investors and stakeholders to assess companies' 
long-term value creation and their sustainability risk exposure. Since 2018, the EU Directive on the 

28 Battiston et al.; for a more comprehensive literature review, please see ESRB (2016) Too late, too sudden: https://www.esrb.europa.eu/pub/pdf/asc/Reports_ASC_6_1602.pdf. 
29 ESRB (2016) Too late, too sudden: https://www.esrb.europa.eu/pub/pdf/asc/Reports_ASC_6_1602.pdf. 
30 Several market initiatives  are starting to collect relevant data for a more thorough risk assessment of sustainable investments. E.g the EU-funded EeMAP initiative is carrying out 
work demonstrating a correlation between energy efficiency in buildings and mortgage performance..
31 Article 77f and 111 of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance. 

9 

 
 
                                                 
 
disclosure  of  Non-Financial  Information  (NFI)  requires  large  public  interest  entities  to  disclose 
material information on key environmental, social and governance aspects and how risks stemming 
from them are managed.32 The Directive allows companies to report sustainability information in a 
flexible  manner.  Going  forward,  an  appropriate  balance  needs  to  be  struck  between  flexibility  and 
the standardisation of disclosure necessary to generate the data needed for investment decisions. In 
terms of disclosure by the financial sector, there is merit in enhancing transparency of asset managers 
and  institutional  investors,  including  the  way  in  which  they  consider  sustainability  risks  and  their 
exposures to climate-related risks.  

There are also growing concerns that the current accounting rules are not conducive to sustainable 
investment  decision-making.  In  particular,  the  European  Parliament's  resolution  on  International 
Financial  Reporting  Standard  (IFRS)  9,  adopted  on  6  October  2016,33  raised  concerns  about  the 
impact  the  new  accounting  standard  on  financial  instruments  (IFRS  9)  might  have  on  long-term 
investments.  The  Commission  recognises  the  importance  of  ensuring  that  accounting  standards  do 
not  directly  or  indirectly  discourage  sustainable  and  long-term  investments.  In  this  regard, 
consideration is needed about whether there could be more flexibility as concerns the endorsement of 
IFRSs wherever specific adjustments would be more conducive to long-term investment. 

Action 9: Strengthening sustainability disclosure and accounting rule-making 

1.  The  Commission  is  launching  a  fitness  check  of  EU  legislation  on  public  corporate 
reporting,  including  the  NFI  Directive  to  assess  whether  public  reporting  requirements  for 
listed and non-listed companies are fit for purpose. It will include the evaluation of sustainability 
reporting requirements and the prospects for digitalised reporting. The Commission will launch a 
public consultation on this in Q1 2018. The conclusions of the fitness check will be published by 
Q2 2019 and will inform any future legislative proposals to be adopted by the Commission.  
2.  By  Q2  2019,  the  Commission  will  revise  the  guidelines  on  non-financial  information. 
Building  on  the  metrics  to  be  developed  by  the  Commission  technical  expert  group  on 
sustainable finance, the revised guidelines should provide further guidance to companies on how 
to disclose climate-related information, in line with the Financial Stability Board's Task Force on 
Climate-related Financial Disclosure (TCFD)34 and the climate-related metrics developed under 
the  new  classification  system  (see  Action  1).  Subsequently,  the  guidelines  will  be  amended  to 
include other environmental and social factors. 

3.  By  Q3  2018,  a  European  Corporate  Reporting  Lab  will  be  established  as  part  of  the 
European  Financial  Reporting  Advisory  Group  (EFRAG),  to  promote  innovation  and  the 
development of best practices in corporate reporting, such as environmental accounting. In this 
forum, companies and investors can share best practices on sustainability reporting, such as the 
climate-related disclosure in line with the TCFD's recommendations.  

4.  In terms of disclosure by asset managers and institutional investors, as part of the Commission's 
legislative  proposal  in  Action  7,  they  would  be  requested  to  disclose  how  they  consider 
sustainability factors in their strategy and investment decision making process, in particular 
for their exposures to climate change-related risks. 

5.  The  Commission  will  request  EFRAG,  where  appropriate,  to  assess  the  impact  of  new  or 
revised IFRSs on sustainable investments.35 The Commission will also ask EFRAG to explore 
potential  alternative  accounting  treatments  to  fair  value  measurement  for  long-term  investment 
portfolios of equity and equity-type instruments. In Q4 2018, the Commission will report, taking 
into  account  EFRAG  current  work,  on  the  impact  of  IFRS  9  on  long-term  investments  and 
explore improvements to the standard for the treatment of equity instruments. 

32 Based on the 2017 financial year of large companies with more than 500 employees listed on a regulated market as well as non-listed banks and insurance companies. 
33 http://www.europarl.europa.eu/oeil-mobile/fiche-procedure/2016/2898(RSP) 
34 https://www.fsb-tcfd.org/ 
35 This will be done as part of EFRAG analysis of the European public good criterion. 

10 

 
 
                                                 
6.  Within the fitness check of EU legislation on public corporate reporting,  the Commission will 
also evaluate relevant aspects of the International Accounting Standards Regulation. It will 
in particular explore how the adoption process of IFRSs can allow for specific adjustments to 
standards  where  they  are  not  conducive  to  the  European  public  good,  e.g.  where  the  standards 
could pose an obstacle to long-term investment objectives. 

4.2

 Corporate governance and undue capital market short-termism  

Corporate  governance  can  significantly  contribute  to  a  more  sustainable  economy,  allowing 
companies to take the strategic steps necessary to develop new technologies, to strengthen business 
models  and  to  improve  performance.  This  would  in  turn  improve  their  risk  management  practices 
and  competitiveness,  thus  creating  jobs  and  spurring  innovation.  Many  companies  have  corporate 
governance strategies to this end, even if they are not always easily comparable. 

Despite  the  efforts  made  by  several  European  companies,  undue  short-term  market  pressures  may 
make it difficult to lengthen the time horizon in corporate decision-making. Corporate managers may 
become  overly  focused  on  short-term  financial  performance  and  disregard  opportunities  and  risks 
stemming  from  environmental  and  social  sustainability  considerations.  As  a  consequence,  the 
interactions  between  capital  market  pressures  and  corporate  incentives  may  lead  to  unnecessary 
exposure  in  the  long-term  to  sustainability  risks.  The  Commission  will  engage  with  all  relevant 
stakeholders to analyse this issue more closely.  

Action  10:  Fostering  sustainable  corporate  governance  and  attenuating  short-termism  in 

capital markets 

1.  To  promote  corporate  governance  that  is  more  conducive  to  sustainable  investments,  by  Q2 
2019, the Commission will carry out analytical and consultative work with relevant stakeholders 
to  assess:  (i)  the  possible  need  to  require  corporate  boards  to  develop  and  disclose  a 
sustainability  strategy,  including  appropriate  due  diligence  throughout  the  supply  chain,  and 
measurable sustainability targets; and (ii) the possible need to clarify the rules according to 
which directors are expected to act in the company's long-term interest.  

2.  The  Commission  invites  the  ESAs  to  collect  evidence  of  undue  short-term  pressure  from 
capital markets on corporations and consider, if necessary, further steps based on such evidence 
by Q1 2019. More specifically, the Commission invites ESMA to collect information on undue 
short-termism in capital markets, including: (i) portfolio turnover and equity holding periods by 
asset managers; (ii) whether there are any practices in capital markets that generate undue short-
term pressure in the real economy. 

5  Action Plan implementation 

Bold  and  ambitious  policies  towards  meeting  the  challenges  of  climate  change,  environmental 
degradation, resource depletion, and social sustainability can only be successful if tackled with the 
right prioritisation and sequencing.  

This  Action  Plan  emphasises  in  particular  the  importance  and  urgency  of  developing  an  EU 
taxonomy, which would provide unified definitions and enable reliable and comparable information 
on sustainable investments. This is a pre-condition for actions like standards, labels, the calibration 
of  prudential  requirements  and  the  use  of  low-carbon  benchmarks.  The  EU  taxonomy  is  also 
complementary  to  the  implementation  of  actions  like  corporate  disclosure  or  the  provision  of 
financial advice.36 While the taxonomy work will begin on climate change mitigation, the scope will 

36 Annex I illustrates the crucial role of the EU taxonomy for the various measures set out in this Action Plan. 

11 

 
 
 
                                                 
be progressively expanded to climate change adaptation and other environmental issues and, later on, 
to social sustainability. Such an approach reflects the urgency to act against climate change and to 
meet our long-term climate and energy targets. 

The implementation strategy combines non-legislative and legislative actions with new measures and 
carefully  targeted  amendments  to  existing  rules.  Alongside  legislative  measures,  non-legislative 
measures  would  ensure  adaptability  and  minimise  administrative  burdens.37  The  Commission  will 
ensure that any relevant impact of financial services legislation on sustainability is properly assessed 
in  the  relevant  impact  assessments,  public  consultations  and  ex-post  evaluations,  in  line  with  the 
Better Regulation guidelines and toolbox.38 

The smooth implementation of this Action Plan, as well as monitoring the achievement of its three 
main objectives, will need appropriate technical support and a solid governance structure, given the 
expertise needed around all fields of sustainable development.  

In the short term, the Action Plan calls on the ESAs to provide direct support to its implementation 
by  performing  specific  tasks,  along  the  lines  suggested  in  this  strategy.  Notably,  the  ESAs  should 
provide  guidance  on  how  sustainability  considerations  can  be  effectively  taken  into  account  in 
relevant  EU  financial  services  legislation  and  help  to  identify  existing  gaps.  They  should  also 
promote  convergence  on  the  implementation  of  sustainability  considerations  in  EU  law.  The 
Commission  will  assess  the  future  resourcing  of  the  ESAs  in  the  context  of  the  post-2020 
multiannual  financial  framework.  In  the  short  term  the  ESAs  should  play  an  important  role  in 
identifying and reporting on the risks that sustainability factors pose to financial stability. This could 
be  done  through  the  development  of  a  common  EU  methodology  for  relevant  scenario  analyses, 
which could later evolve into climate/environment stress testing. 

In the longer term, in view of the implications that the new classification system (taxonomy) has on 
the  implementation  of  this  Action  Plan  and  to  ensure  adaptability  over  time,  the  Commission  will 
consider setting up a more stable governance structure, to be operational once the legal framework 
on  taxonomy  is  in  place.  This  governance  structure  would  be  a  public-private  platform  bringing 
together experts and market participants with public sector bodies, such as the ESAs, the EEA, the 
European  Investment  Bank  (EIB)  and  Eurostat.  In  particular,  this  Platform  would  monitor  key 
developments to ensure the progressive scale-up and adaptability of the EU sustainability taxonomy. 
Over time, it may also carry out other tasks necessary to achieve the objectives of this Action Plan. 
The Platform may also advise the Commission on future sustainable finance actions and will provide 
a  central  forum  of  discussion  among  policy-makers  and  other  relevant  stakeholders.  By  raising 
awareness  and  facilitating  the  work  ahead, the Platform  would  ensure that  sustainability remains  a 
permanent feature of policy design over time. 

6  The way forward 

This  Action  Plan  will  be  instrumental  to  help  deliver  on  the  Paris  Climate  Agreement  and  the 
Sustainable  Development  Goals  set  out  in  the  Commission's  Communication  on  'Next  steps  for  a 
Sustainable European future: European actions for sustainability'. In the State of the Union Address 
2017,  President  Jean-Claude  Juncker  declared  the  ambition  for  Europe  to  be  the  leader  when  it 
comes to the fight against climate change. Following the decision of the United States to withdraw 
from the 2015 Paris Agreement, there is a growing need for global leadership in the move towards 
sustainable development. Europe is well-placed to step into the role of global leader and, in doing so, 
can become the chosen destination for sustainable investments, such as low-carbon technologies. 

37 Annex II clarifies the timeline and sequencing of key measures set out in this Action Plan. 
38 https://ec.europa.eu/info/better-regulation-guidelines-and-toolbox_en 

12 

 
 
                                                 
The  Commission  recognises  that  the  financial  sector  has  a  key  role  to  play  in  reaching  these 
fundamental environmental and social goals, as large amounts of private capital need to be mobilised 
for such change. The Commission will also aim at minimising the impact of new financial stability 
risks  stemming  from  environmental  and  social  issues  for  the  financial  system  and  citizens  that  are 
affected by the significant negative impact of climate change. This would help European businesses 
to remain competitive in a changing global economy. 

The European Union, however, cannot deliver this long-lasting change alone. A coordinated, global 
effort  is  crucial.  By  setting  a  benchmark  for  sustainable  finance  policies  in  this  Action  Plan,  the 
Commission  also  calls  on  other  players,  including  Member  States,39  supervisors,  the private  sector 
and  major  non-EU  countries,  to  take  decisive  action  to  promote  and  lead  transformation  in  their 
respective areas. This Action Plan thus aims to be a blueprint for future discussions in international 
fora  to  promote  a  renewed  approach  to  managing  the  financial  system  more  sustainably.  The 
Commission  will  promote  discussions  on  this  Action  Plan  in  existing  fora,  such  as  the  Financial 
Stability Board, the G20, the G7, the United Nations and the International Organisation of Securities 
Commission (IOSCO).  

The Commission will report on the implementation of this Action Plan in 2019. The strategy set out 
in  this  Action  Plan  is  a  first  essential  step  in  moving  towards  sustainability.  But  it  needs  to  be 
complemented by measures in other areas40, requiring concerted efforts from all relevant actors, to 
reach its full potential.  

39 The Commission will set up a dedicated Member States expert group on sustainable finance. 
40 Such as environment (including natural capital), social dimensions, marine resources and agriculture. 

13 

 
 
                                                 
Annex I – Role of the EU taxonomy in the Action Plan 

EU Taxonomy 

• Climate 
•
• Social 

Environment 

NECESSARY 

COMPLEMENTARY 

Financial 
product 
standards 

Prudential 
rules 

Private investment 

Public investment & policy 

Sustainability 
benchmarks 

EU Label 

• Accounting 
• Corporate non-financial 

disclosure 

• Credit ratings and market 

research 
Investors' duty 
Financial advice 

•
•
• Corporate governance 

•

•

•

Fostering investments in 
sustainable infrastructure 
projects 
European Supervisory 
Authorities' role 
Policy-making process 

14 

 
 
 
 
 
 
 
Annex II - Implementation timeline

March 
2018 

May 
2018 

Q1 
2019 

Q2 
2019 

Q3 
2019 

Call for application for the COM technical expert 
group NL 

Proposal for a regulation with principles and scope 
for an EU taxonomy L 

Expert Group report on a taxonomy on climate 
change mitigation activities NL 

Proposal to clarify institutional investors' and asset 
managers' duties L; Initiative for harmonising 
benchmarks comprising low-carbon issuers L/NL 

COM to amend MiFID II and IDD delegated acts to 
enhance consideration of sustainability in suitability 
assessment L2 

Expert group report on green bond standards NL 

COM to publish fitness check of EU legislation on 
public corporate reporting NL 

Expert Group report on a taxonomy on climate 
change adaptation and other environmental activities 
NL 

COM to adopt a delegated act on the content of the 
prospectus for green bond issuances L2 

COM to amend non-binding guidelines on non-
financial information C 

Expected adoption of the regulation and delegated 
act(s) on a taxonomy for climate change activities L 
Platform on sustainable finance to be operational NL  

Creation of EU Ecolabel for financial products based 
on the EU taxonomy L 

COM to publish a comprehensive study on  
sustainability ratings and research NL 

Measures towards incorporating climate risks into 
prudential requirements in line with the EU 
taxonomy 

Legend 

Taxonomy 
Standards/labels 
Other actions 

NL non-legislative measure 
L    legislative proposal 

L2 level 2 measure 
C   communication 

May 
2018 
Q2 
2018 

Q2 
2019 

15 

 
 
 
 
 
 
Annex III – Workplan of the initiatives set out by this Action Plan  

This annex provides an overview of the initiatives included in the Action Plan. The tables below also 
indicate- where already determined  – whether a  measure takes a  form  of  legislative proposal  (L), 
level 2 measure (L2) or non-legislative measure (NL). 

1. ESTABLISHING AN EU CLASSIFICATION SYSTEM FOR 
SUSTAINABILITY ACTIVITIES 

Subject  to  the  results  of  its  impact  assessment,  Commission 
legislative  proposal  on  the  development  of  an  EU  taxonomy 
for  climate  change,  environmentally  and  socially  sustainable 
activities 

(L) 

Q2 2018 

Report of the Commission technical expert group providing a 
taxonomy for climate change mitigation activities     

(NL) 

Q1 2019 

Report of the Commission technical expert group providing a 
taxonomy 
and  other 
for  climate  change  adaptation 
environmental activities     

(NL) 

Q2 2019 

2. CREATING STANDARDS AND LABELS FOR GREEN 
FINANCIAL PRODUCTS 

Report of the Commission technical expert group on a standard 
for green bonds 

(NL) 

Q2 2019 

Commission delegated act on the content of the prospectus for 
green bond issuances 

(L2) 

Q2 2019 

Assessment of applying the EU Ecolabel to financial products 

(NL) 

As of Q2 
2018 

3. FOSTERING INVESTMENT IN SUSTAINABLE PROJECTS 

Building on the ongoing efforts to reinforce advisory capacity, including for developing 
sustainable infrastructure projects, the Commission will take further measures that will 
improve the efficiency and impact of instruments aiming at sustainable investment 
support in the EU and in partner countries. 

4. INCORPORATING SUSTAINABILITY WHEN 
PROVIDING INVESTMENT ADVICE  

Subject  to  the  results  of  its  impact  assessment,  Commission 
delegated acts (MiFID and IDD) on the suitability assessment  

(L2) 

Q2 2018 

ESMA  to  include  sustainability  preferences  as  part  of  its 
guidelines on the suitability assessment   

(NL) 

Q4 2018 

16 

 
 
 
 
 
 
 
 
 
5. DEVELOPING SUSTAINABILITY BENCHMARKS 

Commission  delegated  acts  on 
the 
methodology  of  benchmarks  and  on  the  features  of  the 
benchmarks  

transparency  of 

the 

(L2) 

Q2 2018 

Subject  to  the  results  of  its  impact  assessment,  an  initiative 
creating a designated category of benchmarks comprising low-
carbon issuers 

(L/NL) 

Q2 2018 

Report  of  the  Commission's  technical  expert  group  on  the 
design and methodology of the low-carbon benchmark  

(NL) 

Q2 2019 

6. BETTER INTEGRATING SUSTAINABILITY IN 
RATINGS AND RESEARCH 

Commission  services  report  on  progress  made  on  the  actions 
involving credit rating agencies 

(NL) 

Q3 2019 

ESMA  to  assess  current  practices  in  the  credit  rating  market; 
ESMA  to  include  ESG  information  in  its  guidelines  on 
disclosure for credit rating agencies 

(NL) 

Q2 2019 

Study on sustainability ratings and research  

(NL) 

Q2 2019 

7. CLARIFYING INSTITUTIONAL INVESTORS AND 
ASSET MANAGERS' DUTIES 

Subject  to  the  results  of  its  impact  assessment,  Commission 
legislative  proposal  to  clarify  institutional  investors'  and  asset 
managers' duties on sustainability and to increase transparency 
of  end-investors,  including  transparency  on  their  strategy  and 
climate-related exposures 

(L) 

Q2 2018 

8. INCORPORATING SUSTAINABILITY IN 
PRUDENTIAL REQUIREMENTS 

Work  towards incorporating  climate  risks into  institutions'  risk 
management policies and on the potential calibration of banks' 
capital requirements in the Capital Requirement Regulation and 
Directive to take into account climate change-related risks while 
safeguarding financial stability and ensuring coherence with the 
EU taxonomy.  

Issue under 
discussion in 
the on-going 
legislative 
procedure 

2018-
2019 

The  Commission  will  invite  the  European  Insurance  and 
Occupational  Pensions  Authority  to  assess  the  impact  of 
prudential  rules  for 
insurance  companies  on  sustainable 
investment 

(NL) 

Q3 2018 

17 

 
 
 
 
 
 
 
 
 
 
 
 
9. STRENGTHENING SUSTAINABILITY DISCLOSURE AND 
ACCOUNTING RULE-MAKING 

Publication  of  conclusions  of  the    fitness  check  on  public 
corporate  reporting.  This  will  inform  any  future  legislative 
action by the Commission.  

(NL) 

Q2 2019 

Revision  of  the  guidelines  on  non-financial  information  as 
regards climate-related information.  

(NL) 

Q2 2019  

Subject to the result of its impact assessment, proposal requiring 
asset managers and institutional investors to disclose how they 
consider  sustainability  factors  in  their  investment  decision 
making  process  (as  part  of  the  proposal  foreseen  under  action 
7). 

(L) 

Q2 2018 

Establishing  a  European  Corporate  Reporting  Lab  as  part  of 
EFRAG 

(NL) 

Q3 2018 

Commission  to  systematically  request  EFRAG  to  assess  in  its 
endorsement advice the potential impact of new or revised IFRS 
standards on sustainable investments   

(NL) 

Q1 2018 

Commission  request  to  EFRAG  to  explore  sound  alternative 
accounting  treatments  to  fair  value  measurement  for  long-term 
investment portfolios of equity and equity-type instruments 

(NL) 

Q2 2018 

Commission  report  on  the  impact  of  IFRS  9  on  long-term 
investments  

(NL) 

Q4 2018 

10. FOSTERING SUSTAINABLE CORPORATE 
GOVERNANCE AND ATTENUATING SHORT-
TERMISM IN CAPITAL MARKETS  

Assessment of possible ways to promote corporate governance 
more conducive to sustainable finance 

(NL) 

Q2 2019 

ESAs  to  collect  evidence  of  undue  short-term  pressure  from 
capital  markets  on  corporations  and  consider  further  steps 
based on such evidence  

(NL) 

Q1 2019 

18 

 
 
 
 
Annex IV - Visualisation of the actions 

19