C 152/102
EN
Official Journal of the European Union
6.4.2022
4.2.5.
The steps to support credible social investments (Action 2d) are nowhere near sufficient to close the strategy’s gaps in terms of the social sphere.
It is true that the Taxonomy Regulation (10) provides a minimum level of protection by referring, inter alia, to the core labour standards of the International Labour Organization.
However, this is not enough for the taxonomy to support social progress.
A consistent approach is also needed to enhance social sustainability, with people and the world of work at the centre.
The basis is already in place with the European Pillar of Social Rights and the SDGs.
For example, a taxonomy that covers environmental and social objectives equally and so generally incorporates the DNSH principle (11) can provide a valuable basis for an economically, socially and environmentally sustainable EU.
A holistic taxonomy should now be rapidly developed with the involvement of social partners and civil society.
In any case, the end of 2021 seems too late for the report on the social taxonomy to be published.
4.2.6.
The review of the technical standards under the Sustainable Finance Disclosure Regulation (SFDR) (12) — with a view to clarifying indicators for adverse ecological and social impacts — is also coming too late as it is not scheduled to take place until late 2022.
In particular, the EESC calls for the indicators for workers’ and human rights to also be reviewed much more quickly and for higher standards to be implemented.
It goes without saying that the social partners and civil society must be fully involved here too.
4.3.
Improved resilience to sustainability risks 4.3.1.
The EESC supports the inclusion of sustainability factors in financial sector risk management.
This is the only way to break the vicious circle of finance companies funding climate-damaging activities.
While climate change poses severe risks to banks and insurance companies, it also affects the financial sector as a whole and even threatens overall financial stability.
In this context, the EESC warns against misinterpreting the financial sector’s role as an enforcement body imposing sustainability objectives in the general interest.
However, climate risks are hard to quantify accurately because of the scale, the lack of precedence and the uncertainty.
But this should under no circumstances delay concrete steps being taken, which would further exacerbate the problem.
Overall, a swift and prudent approach is needed to prevent shock responses.
The EU taxonomy should serve as a basis for this.
4.3.2.
The inclusion of sustainability risks in financial reporting standards and the development of a standard for natural capital are welcome, with scientifically sound, stringent and reliable standards and methodologies being essential (Action 3a).
The systematic inclusion of relevant ESG risks in ratings and outlooks is also useful (Action 3b).
The EESC suggests that the debate on the EU rating agency be relaunched in the current circumstances, thus consolidating the EU’s pioneering role in the field of sustainability.
4.3.3.
The approach of taking into account ESG factors in banks’ risk management systems and in the prudential framework of insurance is logical (Actions 3c and 3d).
They should also be taken into account in revisions of the Capital Requirements Regulation (CRR), the Capital Requirements Directive (CRD) and Solvency II (13), which are likely to be accompanied by longer debates.
The EESC therefore also recommends including timely measures in the standards for measuring risks in risk management to ensure a rapid mapping of sustainability risks and an appropriate provision of capital.
At the technical level, guidelines from European Supervisory Authorities are appropriate for this, among other things.
Overall, a sound, forward-looking and carefully calibrated risk and capital policy is recommended that takes account of the effects of sustainability risks on financial stability.
4.3.4.
Measures such as internal stress tests go in the right direction as complementary measures.
However, the EESC is opposed to the idea of dedicated prudential treatment for exposures classified as sustainable, which would reduce capital requirements, for instance.
The increased complexity of the regulatory framework could lead to confusion and regulatory loopholes.
The EESC therefore advocates a strictly economic risk assessment.
Risk weighting should be based primarily on economic stability risks.
Environmentally harmful investments already run the risk of being reduced in value and failing here.
The EESC warns of a supervisory roller-coaster ride and a threat to the standards achieved if the CRR, the CRD and Solvency II are unravelled.
(10) (11) (12) (13)
Regulation (EU) 2020/852, Article 18.
‘Do no significant harm’ principle.
Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector.
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 (Solvency II) (OJ L 335, 17.12.2009, p. 1).