The Sustainable Finance Lab has contributed to the High Level Expert Group on Sustainable Finance established by the European Commission. The experts published their interim report this summer, and will deliver final recommendations at the end of this year. Whereas the SFL members largely agree with the analyzes of the experts, they point out that the early recommendations fail to address the crucial issue of incentives. More transparency will not bring the Union the 180 billion euros a year (for the next 20 years) necessary for the sustainability transition.
In particular, SFL advocates capital requirements that reflect the actual risks of climate change and other ecological stress and drawing up a model mandate for asset managers, through which pension funds can effectively integrate sustainability into their contracts with asset managers.
This would eliminate perverse incentives, and make bankers and traders focus on the long term and look at all relevant sustainability information. Only then will more transparency, which is needed, really have an effect.