Policy Brief, Sustainability Reporting, Sustainability Risks and Opportunities
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PB 9/2021: The EU sustainable finance strategy – Implications for the future German Federal Government
- The EU’s revised sustainable finance strategy confirms the important role of the financial sector in the sustainability transition of the economy, but does not sufficiently spell out the details of it. Many of the actions are welcome, but often lack urgency and momentum.
- The strategy should be placed more firmly in the macroeconomic regulatory environment to support the interaction of different policy instruments such as CO2 disclosure requirements and CO2 pricing.
- The definition of sustainability risks is very general. In particular, transition risks should be explicitly taken into account from now on in addition to physical risks.
- In the light of the enormous importance of the building sector for climate protection, the green credit and mortgage market should be further developed.
- Ongoing legislative initiatives in the area of digitalisation and data handling at national and EU level should be given greater consideration in the sustainable finance agenda.
- The strong focus on climate protection disregards other important environmental goals of the Green Deal, such as biodiversity and social factors.
- Disclosure and reporting requirements for small and medium-sized enterprises should be combined with concrete standards and external audit mechanisms.
- As regards the public sector, more far-reaching requirements should be imposed in terms of the achievement of climate targets, disclosure and reporting obligations, and the measurement of sustainability risks and impacts of investments.
- A stronger commitment to ESG on the part of institutional investors should be supported by a German stewardship code and uniform standards.
Acknowledgements: The partners of the Sustainable Finance Research Platform would like to thank the guest authors Oliver Herrmann, Malte Hessenius, Katharina Erdmann, Laura Kaspar, Blerita Korça and Liyana Nayan from Climate & Company for their contributions.