All financial institutions must disclose sustainability risks and impacts, say MEPs
Such disclosure is fundamental to ensure that investors make better informed decisions about the environmental and social risks they are exposed to, and the impacts they create with their investments.
The MEPs’ making the disclosure of sustainability risks and impacts mandatory for all financial market participants, including banks, is a critical step to ensure that sustainability becomes gradually mainstreamed in the financial system.
Sebastien Godinot, Economist at WWF European Policy Office said: “We are very pleased to see that MEPs understood the importance of mainstreaming sustainability disclosure to all financial market participants and financial products, which is necessary to ensure that disclosure does not only focus on the small niche of green financial products. This is what the EU High-Level Expert Group on Sustainable Finance (HLEG) had recommended.
The Parliament’s addition of a ‘sustainability risk’ definition to the proposed legislation will help provide a predictable framework to encourage investment into sustainable markets. Investors need certainty, and clear definitions are the basis of that.”
WWF strongly encourages the Council during the upcoming trilogue discussions to follow the Parliament’s lead in making sure that sustainability disclosure is mainstreamed to all financial market participants and products.
In addition, the EU should link the taxonomy regulation to the disclosure regulation, in order to ensure consistency among the sustainable finance legislations and further strengthen the framework for financial market participants to invest in sustainability-aligned projects.
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