by 4 minutes Reuters (Reuters) – By 2050, Europe wants to spend hundreds of billions of euros annually through EU banks and markets in sustainable initiatives, making it the first “climate-neutral continent.” PHOTO FROM THE FILE: At night near Belchatow, Poland, smoke and steam billows from Belchatow Power Station, Europe’s largest coal-fired power plant owned by PGE Group. 5th of December, 2018. Kacper Pempel/Kacper Pempel/Kacper Pempel/Kacper Pempel/ The European Union’s sustainable finance framework, which was released on Tuesday, lays out specific milestones and actions for finance, businesses, and people in order to meet the EU’s climate objective. It expands on a 2018 initiative that laid the groundwork for the bloc’s ‘taxonomy,’ or classification of truly green investments, as well as climate-related business disclosure requirements. The EU’s executive European Commission stated, “Because the amount of investment required is substantially above the capacity of the public sector, the key purpose… is to channel private financial flows into appropriate economic activities.” According to Reuters, EU states, including asset managers, pension funds, banks, and insurers, will be asked to review how their financial markets, including asset managers, pension funds, banks, and insurers, contribute to eliminating the bloc’s net carbon emissions by 2050 by June 2023. The European Commission and the European Central Bank will then define intermediate financial sector targets to determine the best transition pace. The EU executive also stated that it will propose reforms to bank laws to ensure that environmental, social, and governance (ESG) considerations are at the forefront of risk management on their books. The European Banking Authority’s ongoing review of prudential or capital charges for exposures to environmental and social activities will be pushed back until 2023. Insurance capital rules could potentially be changed in a similar way. ” The Commission’s intention to incorporate sustainability considerations into prudential regulation is a high-risk endeavor… We risk undoing much of the progress gained since the financial crisis “According to Markus Ferber, a senior member of the European Parliament, the assessment is accurate. To counteract vulnerabilities to financial stability posed by climate change, macroprudential tools, like as sector-wide capital requirements, may be required. The Club of Rome, a research organization that advised the EU on its taxonomy, said the approach focuses too much on measures to pursue rather than addressing the scope and severity of the climate catastrophe. “The Commission will explore and assess additional measures to enable all relevant financial market players and advisers to consider the positive and negative sustainability consequences of their investment decisions, as well as the products they advise on a systematic basis,” the statement stated. The European Commission has proposed voluntary rules for “green” bonds that finance long-term investments. The Commission said that taxonomy regulations for agriculture, certain industries, and perhaps nuclear energy will be published later this year. It will also consider new legislation to assist energy sources that can help reduce emissions, such as gas power stations, according to the statement. The European Union is deadlocked on whether gas merits a green designation. Some states argue that it should be encouraged in order to help countries transition away from more damaging coal, while others argue that labeling a fossil fuel as “green” is untrustworthy. Brussels has stated that it will examine taking steps to strengthen the ESG business rating’s comparability and openness. The grades are excessively opaque, according to regulators, and may be contributing to “greenwashing,” or companies exaggerating their green credentials to attract investors. By establishing green loans and mortgages by 2022, the policy aims to empower individuals and the bloc’s 23 million small businesses. In order to “recognize and record” climate and environmental risks in financial statements, new accounting regulations may be required. BEUC, a European consumer organization, praised the efforts to promote the use of green mortgages and strengthen ESG ratings to combat greenwashing. (1 dollar = 0.8443 euros) Kate Abnett contributed additional reporting from Brussels, while William Maclean and Alexander Smith edited the piece./n
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