The Action Plan for a greener, cleaner economy published by the European Commission in March 2018 sets out strategies for the financial system to support the EU's climate and sustainable development agenda. This initiative supplements the Paris Agreement on Climate Change y United Nations Agenda 2030 for Sustainable Development. The EU joins the initiative with the EU 2030 climate and energy framework, the Circular economy action plan and the Implementation by the EU of Agenda 2030 for Sustainable Development. The Action Plan is part of the efforts of the Capital Markets Union (CMU) to link finance with the specific needs of the European economy for the benefit of the planet and society.

The Action Plan is based on the final report of January 2018  prepared by the High Level Expert Group on Sustainable Finance, set up in 2016 and composed of twenty high-level experts from civil society, the financial sector, academia and observers from European and international institutions, which presents eight priority actions based on the opportunities that sustainable finance presents, of which the main elements of the Action Plan are:

  • Establish a common language for sustainable finance through a unified EU classification system that defines what is sustainable and identifies the areas of greatest impact.
  • Create EU labels for green financial products on the basis of such a classification system with the aim of facilitating their identification by investors.
  • Strengthen disclosure and sustainability requirements in the investment process for asset managers and institutional investors.
  • Establish an obligation for insurance and investment companies to advise their clients on sustainability issues.
  • Integrate sustainability into the prudential requirements of banks and insurance companies, with the aim of examining the feasibility of recalibrating the capital requirements applicable to sustainable investments, from a risk point of view while ensuring the financial stability of the institution.
  • Promote greater transparency in annual financial and non-financial information, with the launch by the Commission for public consultation of the revision of the Non-Financial Reporting Guidelines to bring them into line with the recommendations of the Financial Stability Board Working Group on Climate-Related Financial Disclosure.

In May 2018, the European Commission presented legislative proposals to achieve the objectives of the Action Plan:

  • Draft Regulation on the establishment of a framework to facilitate sustainable investment. This framework creates a common language for investors in future decision-making, clarifying what is considered "sustainable".
  • Draft Regulation on the disclosure of information relating to sustainable investors and sustainability risks. With an impact on UCITS, AIFMD, MiFID II, Solvency II, IORP II, IDD, EUVECA and EUSEF regulations, it establishes new obligations for asset managers and financial institutions in order to integrate environmental, social and governance (ESG) criteria into investment decision-making processes and advisory processes, as well as pre-contractual and post-contractual information on ESG matters.
  • Draft Delegated Regulation amending Delegated Regulation 2017/565/EU on organisational requirements under MiFID II. Incorporation of ESG factors into the distribution of insurance-based investment products (Action 4 of the Action Plan).
  • Draft Regulation on low carbon impact and positive carbon impact benchmarks. It establishes two new categories in the benchmarks which include a specific section on the subject (Action 5 of the Action Plan).