EU Sustainable Finance Strategy
One goal of the European Green Deal is to mobilize private investments for the transition to a climate-neutral economy. The EU aims to become the first net zero continent, and the European Green Deal is the roadmap for achieving this.
It is intended to ensure the success of the transition to a modern, resource-efficient, and competitive economy. This implies no net emissions of greenhouse gases by 2050, decoupling economic growth from resource use while also ensuring that no person and no place is left behind in the transition.
In order to achieve Austria’s climate targets by 2040 and those of the European Union by 2050, significant investments will have to be made. These investments will generate sustainable growth, which implies the creation of added value as well as good jobs in future-proof industries. Sustainable finance plays a key role in the realization of these goals against the backdrop of the European Green Deal and the EU’s international obligations with regard to climate and sustainability targets.
What is “sustainable finance”?
Sustainable finance also takes environmental, social, and governance aspects into account when making investment decisions. Under this principle, investments shall increasingly flow into sustainable economic activities and projects. The basis for these are the so-called ESG criteria, which stand for environment, social, and governance.
The European Commission’s Sustainable Finance Strategy was published in July 2021. This strategy encompasses four primary areas in which additional measures are needed so that the financial system can fully support the transition to a sustainable economy.
- Financing the transition to sustainability: This strategy provides the tools and policies to enable economic actors across the economy to finance their transition plans and to reach their climate targets as well as broader environmental targets – regardless of their starting point.
- Inclusiveness: This strategy respects the needs of and provides opportunities for individuals and small to medium-sized companies to have greater access to sustainable finance.
- Financial sector resilience and contribution: This strategy sets out how the financial sector itself can contribute to meeting Green Deal targets, while at the same time becoming more resilient and combatting greenwashing.
- Global ambition: This strategy sets out how to promote international cooperation for an ambitious global sustainable finance agenda.
The European Commission’s Sustainable Finance Strategy encompasses numerous measures, including the expansion of the EU Taxonomy Regulation. In addition, the strategy proposes numerous measures aimed at implementing climate risk assessments to a higher degree, preventing greenwashing, and increasing the participation of investors.
Additional information on this topic: Sustainable finance – European Commission (→ ec.europa.eu)
More information: EU Taxonomy Regulation