On 28 October 2016, the European Commission decided to establish a High Level Expert Group on sustainable finance, one of the European Commission's primary objectives within the EU Capital Markets Union ("CMU").

This Legal Insight is the first part of our dedicated newsletter series on the CMU. We will provide regular updates on CMU-related topics.


At the beginning of 2015, the European Commission unveiled its plan to boost funding and growth across Europe through the creation of a single capital market by issuing its Green Paper on Building a Capital Markets Union and launching a website dedicated to it.

The CMU is a framework under which various legislative initiatives will be taken in diverse areas. The focus will be on changes to the prospectus regime to make it easier and less expensive for SMEs (small- and medium-sized enterprises) to raise capital, but will also cover other areas such as long-term and sustainable investment, financing of infrastructure, securitisation, alternative sources of financing (eg venture capital and crowdfunding), insolvency, corporate and tax law. It is a medium- to long-term project with some key actions expected in 2017.

Sustainable investment – a CMU key priority area

As part of the CMU, the European Commission identified the need for reforms to support sustainable finance/investment in clean technologies and their deployment, thereby contributing to the creation of a low-carbon and climate resilient economy. The European Commission understands sustainable investment as encompassing environmental, social and governance considerations in the investment process, and seeks to encourage institutional investors to adopt sustainable investment policies.

The establishment of a High Level Expert Group (HLEG)

In a Press Release of 28 October 2016, the European Commission reiterated the crucial role of capital markets and private sources in mobilising investment in sustainable technologies, applications and infrastructure. As a starting point, the European Commission announced that it will establish a High Level Expert Group ("HLEG") to develop an overarching European strategy on sustainable investment to integrate sustainability in EU financial policy. The HLEG will be composed of up to 20 senior experts coming from civil society, the business community and other non-public sector institutions. Interested individuals are invited to submit applications by 25 November 2016.

Work programme and expected achievements of the HLEG

The HLEG will commence work in January 2017 and proceed in two phases:

  • Phase I - Identification and assessment phase: During this phase, the HLEG will focus on identifying

    • the most critical market segments for sustainable finance (eg green financial products such as green bonds and green loans, guarantees and advisory services) and actors who will have a particular responsibility or role in developing these;
    • potential impediments (eg need for commonly accepted definition of what is sustainable or green, rules in existing financial legislation);
    • appropriate regulatory instruments to implement an effective sustainable finance policy (eg information disclosures, risk-management, accounting and regulatory capital requirements for sustainable or green investments); and
    • risks for the EU financial system due to its exposure to carbon-intensive assets and ways to mitigate those (eg through stress-testing for the financial sector).
  • Phase II - Development phase: Building on the findings of phase I, phase II will be dedicated to the development of a comprehensive policy roadmap setting out

    • recommendations on how financial policy should address specific challenges;
    • prioritisation of actions from a short and long-term perspective;
    • synergies with public finance development to ensure that any changes complement public finance support; and
    • areas in which further work is required and suggesting ways to take its core recommendations forward.

The HLEG is expected to deliver a comprehensive report on possible EU policy reforms to the European Commission by the end of 2017, and an earlier interim report, both of which will be published. We will monitor those developments and will provide updates on any areas of interest throughout 2017.

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