On 13 July 2017, the High-Level Expert Group ("HLEG") on Sustainable Finance published its interim report ("Interim Report") setting out concrete steps to create a financial system that supports sustainable investments.

This Legal Insight is part of our dedicated newsletter series on the European Capital Markets Union ("CMU").


The growing awareness of environmental challenges and sustainability risks as well as the adoption of the UN 2030 Agenda and the conclusion of the Paris Climate Agreement by the EU in 2015 call for an EU strategy on sustainable finance.

Establishing an EU strategy on sustainable finance is a priority action of the CMU. In December 2016, the HLEG was established to advise on the development of such an EU strategy. The recently published HLEG Interim Report was recently presented in a public hearing on sustainable finance on 18 July 2017. At the same time, the HLEG presented an online questionnaire on the Interim Report aimed at obtaining targeted feedback until 20 September 2017, which would be reflected in the final report of the HLEG scheduled for publication by the end of 2017.

Interim Report

The Interim Report identifies two imperatives for Europe's financial system:

  • to improve the financial sector's contribution to sustainable and inclusive growth, notably by financing society's long-term needs for innovation and infrastructure, and accelerating the shift to a low carbon and resource-efficient economy; and
  • to strengthen financial stability and asset pricing by improving the assessment and management of long-term material risks and intangible drivers of value creation, including those related to environmental, social and governance factors.

In addition, the Interim Report presents an overall vision for a sustainable financial system, maps out challenges and opportunities in developing an EU policy agenda for sustainable finance, and identifies financial policy areas in which reforms towards a sustainable finance system might be possible.

The HLEG explores ways of integrating sustainability into the EU's regulatory and financial framework, covering issues such as fiduciary duty, disclosure, accounting, corporate reporting and benchmarks. It also focusses on individual market participants and facilitators as well as measures to promote more capital flow towards sustainability.

Early recommendations

The Interim Report contains inter alia the following early recommendations, whereby the Commission shall:

  • develop a classification system for sustainable assets;
  • develop a standard and label/brand for green bonds and other sustainable assets as well as for sustainable funds; 
  • provide an EU-wide set of principles of fiduciary duties and related concepts of loyalty and prudence that encompasses sustainability (eg in the course of upcoming reviews of the European financial services regulatory framework);
  • strengthen disclosures by firms and financial institutions on sustainability issues;
  • integrate sustainability in all relevant EU financial legislation (sustainability test for all future financial services legislation); and
  • develop measures to connect public authorities and investors on sustainable infrastructure opportunities by creating "Sustainable Infrastructure Europa", an organisation which shall advise public authorities on the structuring of infrastructure projects and match them with investors.

The Commission has already listed several of the HLEG's recommendations under one of the nine new priority actions set out in the CMU action plan mid-term review.

Policy areas for further discussion

The HLEG also has identified policy areas that require further discussion and analysis, such as long-term policy signals, governance of firms and financial institutions, integrating sustainability in ratings and accounting, stock exchange and green finance centre, and banking.

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