Financial sector faces heavier burden in EU climate plans, sources say

LONDON - The European Union is considering a wide range of measures to bring the bloc’s financial sector into line with its climate plans, sources who have seen a European Commission strategy paper told Reuters.

The document outlines several actions including combating so-called greenwashing of investments, setting climate change targets for banks and encouraging low carbon blockchain projects, the sources said.

Entitled “financing transition to a sustainable economy”, the paper builds on the EU executive’s 2018 action which set the stage for the bloc’s classification of truly green investments, and mandatory climate-related disclosures by companies.

But the commission believes more action is needed because it has become clearer that Europe should improve how the financial sector contributes to sustainability, the sources said.

The EU’s goal to eliminate its net emissions by 2050 will require huge investments, much of it private funding. Its system of classification, or taxonomy, aims to make green activities more visible and attractive to investors.

EU states will be asked to assess how their financial markets contribute to reaching the bloc’s climate goals, covering asset managers, pension funds, banks and insurers.

A consolidated report on EU financial markets’ transition will be delivered by the end of 2023, the sources said.

The commission will then coordinate with the European Central Bank and the bloc’s banking watchdog to “calibrate the right pace for the transition”.

There will be more work on labelling bonds as sustainable.