As priority actions, the HLEG recommends: establishing an EU sustainability taxonomy, starting with climate mitigation, to define areas where investments are needed most; clarifying investor duties to extend the time horizons of investment and bring greater focus on environmental, social and governance (ESG) factors into investment decisions; upgrading disclosures to make sustainability opportunities and risks transparent; enabling retail investors to invest in sustainable finance opportunities; developing official European sustainability standards for some financial assets, starting with green bonds; establishing ‘Sustainable Infrastructure Europe’ to deploy development capacity in EU member states for infrastructure necessary for a more sustainable economy; and integrating sustainability firmly in the governance of financial institutions as well as in financial supervision.
The HLEG also makes some cross-cutting recommendations. It advises the EU: to confront short-termism in financial markets so as to reduce its negative impact on long-term corporate investment and development; to consider ways to empower citizens to engage with sustainable finance; to monitor investment plans and delivery through a dedicated EU observatory on sustainable finance; to improve financial market benchmark transparency and guidance; to ensure that EU accounting rules do not unduly discourage long-term investment; to establish a ‘Think Sustainability First’ principle at the heart of EU policy-making; and to drive sustainable finance at the global level.
The HLEG also has recommendations for specific sectors of the financial system. Their purpose is: to promote real economy and sustainability lending in the banking sector; to enable insurance companies to have a stronger role in equity, long-term and infrastructure investments; to ensure that asset managers, pension funds and investment consultants grasp the sustainability preferences of their clients; to ensure that credit rating agencies lengthen the time horizon of risk analysis and disclose how they consider ESG factors; to have listing authorities promote disclosure of ESG information; and to obtain better long-term research by investment banks.
Finally, the HLEG is aware that there are many other social and environmental challenges to tackle. The HLEG recommends: supporting the growth of social enterprises and the financing of social-related projects; revaluing natural and environmental capital in economic and financial decisions; and re-orienting agriculture to a way that is more sustainable for the economy, the environment and public health.