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As the new Commissioner for Financial Services, Financial Stability and the Capital Markets Union, I am honoured to take part in this event.

It’s clear that we face some daunting challenges in light of the COVID crisis.

Today I would like to share with you my thoughts about the important role that capital markets and the renewed green finance strategy can and must play in rebooting the European economy.

But the Capital Markets Union and the new European Green Deal are not just about the recovery.

It’s about building up a strong and resilient European financial system for the long-term.

A single market for capital where retail investors take part securely and with confidence.

Where small businesses and start-ups have more sources for capital, beyond bank lending.

Where capital flows towards sustainability.

I want to see a financial sector that delivers for society, sustainability and the environment.

I am glad to be addressing the retail investor community today.

Your choices determine where capital is invested - and how it is channelled towards our priorities.

Innovative digital start-ups.

Projects that centre sustainable growth.

SMEs that add value to every sector of the economy.

(Completing Capital Markets Union)

We want to make progress on the Capital Markets Union to get capital flowing across the Union, to create a stronger, more resilient economy that is prepared for the green and the digital transitions.

Only large, well-functioning and integrated capital markets can provide the scale of support needed to recover from the coronavirus crisis.

Only a functioning CMU can mobilise and channel the enormous investment required to tackle the climate and environment challenges we face and support the digitalisation of our companies, so they remain competitive globally.

On 24 September, the Commission adopted the Capital Markets Union Action Plan, just before I took office. I’m committed to its objectives: to create a genuine EU-wide single market for capital which is green, digital, inclusive and resilient. And we want to make the EU safer for individuals to invest for their long-term goals.

Progress is essential to realise our ambition to mobilise and channel the enormous investment required to tackle climate and environmental challenges, in addition to the economic recovery.

We have made important progress since our first Capital Markets Union Action Plan in 2015.

But some fundamentals are still lacking, capital market integration remains insufficient, and we still have a lot to do to put in place a genuine single market for capital.

There is no silver bullet. We need a comprehensive approach.

In our new Action Plan, we have committed to 16 legislative and non-legislative actions, with clear timelines for delivery.

They include measures such as:

  • Creating a single access point to company data for investors,
  • Strengthening investment protection to support more cross-border investment in the EU,
  • Facilitating shareholder engagement to make it easier for shareholders to have their say in how companies are run,
  • Supporting increased pension adequacy across Europe,
  • And simplifying withholding tax procedures.

(Encouraging greater retail investor participation)

One fundamental element of the new CMU Action Plan is the increased participation of retail investors.

We want to put retail investors in a position to take full advantage of capital markets.

That’s why our Action Plan includes a retail investment strategy, which we intend to present in 2022. And we want to ensure that retail investors receive fair advice as well as clear and comparable product information.

We need to create trust. We will take a customer-centric approach, making sure that our legislation works through the whole “retail investor journey”.

We recently launched an extensive study to assess how to improve our current retail investor protection framework.

It’s looking at some of the most important aspects of the customer journey – transparent disclosure rules, unbiased advice and suitability assessments.

It will be an important input for our retail investment strategy.

We also intend to launch a public consultation in the first half of next year, and I really encourage you to contribute your views on what still needs to be done.

The interests of individual investors will be a key part of the retail investment strategy.

And we want to broaden participation in capital markets, and ensure those who are interested in retail investment have the right skills and knowledge to invest responsibly.

So let me say a word about financial literacy, which is another element of the CMU action plan and one of my priorities as Commissioner.

Financial literacy runs across the entire financial consumer protection framework. It is a tool that can empower consumers to make more informed choices. Society as a whole would benefit from improved financial literacy, which would result in a more inclusive society with financially more resilient households.

Financially literate individuals show better saving patterns, participate more in financial markets, prepare better for retirement and are less prone to excessive borrowing.

However, the level of financial literacy is too low. According to a 2014 survey, about half of EU adults did not sufficiently understand basic financial concepts.

And the COVID crisis is causing extra strain, making progress on financial literacy even more urgent.

The cost of financial illiteracy is high, and it is paid disproportionally by the most vulnerable groups.

One third of EU households are financially fragile – meaning they would not able to face an unexpected expense in normal times, let alone during a pandemic.

We have to invest in financial literacy so we are not caught unprepared for the next crisis and so individuals have tools to deal with shocks.

Education is the responsibility of the Member States, but the Commission can play a coordinating and complementary role.

By the middle of next year, the Commission will carry out a feasibility study on the development of an EU financial competence framework.

This framework would discuss the knowledge, skills and behaviour that individuals need to have to be financially literate, and provide a basis for the development of policies and tools.

(Investor protection)

Investor protection and confidence are key assets that ensure the proper functioning and attractiveness of our EU capital markets.

Now I am aware that both Better Finance and DSW have expressed concerns about the recent Wirecard scandal.

This was a disaster for many investors. Many individuals have lost significant sums of money.

The Commission is following the Wirecard case very closely, and welcomes the review by ESMA of the German supervisory response. This is a useful step in understanding the circumstances that led to Wirecard’s failure.

Strong regulation and supervision are key to preserving trust in finance, whether for traditional or new players.

The Commission will carefully assess the implications of the Wirecard case for the regulation and supervision of EU capital markets, and act to improve the regulatory framework where necessary.

(Transformational changes)

Our economy is undergoing fundamental changes – not least the digital transition.

The Commission’s recent Digital Finance Strategy sets out how Europe can harness the potential of digital and to help its recovery strategy, with digital technologies playing a key role in relaunching and modernising the European economy across sectors and moving Europe forward as a global digital player.

By boosting digital finance, we can open new channels to mobilise retail investments, especially among younger investors, and unlock new ways of directing funding to EU businesses, in particular to SMEs.

It’s an important complement to the CMU Action Plan, which can also support Europe’s economic recovery strategy and the broader economic transformation.

Digital finance can also open up new channels to mobilise funding in support of our wider policy goals such as the Green Deal.

(The green transition)

But perhaps the greatest transformation that we face relates to climate change.

Earlier this year the Commission announced the European Green Deal: a plan to make Europe carbon neutral by 2050.

Let me be clear: the Covid-19 crisis cannot be used as an excuse to delay addressing the challenges of climate change, environmental degradation and biodiversity loss.

The Commission is gearing up for a sustainable recovery.

The Commission’s NextGenerationEU recovery package will mobilise €750 billion Euros to help Member States recover from the crisis, in the form of grants and loans.

This extraordinary public stimulus has been designed to accelerate the green transition and digital transformation.

In her State of the Union speech, President Ursula von der Leyen announced that 37 per cent of NextGenerationEU will be spent directly on European Green Deal objectives.

And 30 per cent of the financing of the package will be raised through green bonds.

The financial sector and the capital markets have a vital role to play in the Green Deal.

We already have a number of important measures in place.

As part of our 2018 Action Plan on Sustainable Finance, we have developed a Regulation for the EU Taxonomy – a classification system for sustainable economic activities – for the benefit of both issuers and investors alike.

A few days ago, we put forward the first draft Delegated Act to implement the Taxonomy. This sets technical screening criteria on climate change mitigation and adaptation.

The draft Delegated Act for public consultation for 4 weeks. I would encourage you to join many other stakeholders and participate in this consultation, if you have not done so already.

By the end of next year, we plan to adopt a second Delegated Act covering the four remaining objectives of the Taxonomy dealing with:

  • water and marine resources
  • circular economy
  • pollution
  • and biodiversity.

We will also develop an EU Green Bond Standard – we hope to adopt a legislative proposal on this in the first half of next year.

But we need to do more.

That’s why the Commission is preparing a Renewed Sustainable Finance Strategy for early next year.

This is one of the last opportunities to put our financial system on track to reach our 2030 and 2050 climate targets.

We are aiming for an ambitious, comprehensive strategy that builds on our achievements and explores new areas to mainstream sustainability in the financial and corporate sectors in Europe and globally.

The strategy will need to strengthen the foundations for sustainable investment by creating an enabling ecosystem, with appropriate tools and frameworks.

We’ll adapt rules on Non-Financial Reporting to enhance sustainability disclosures by corporates. And we want to promote long-termism in investment.

We also need to increase opportunities for citizens, financial institutions and companies to make a positive impact on sustainability: for example, looking at how pensions and savings are invested.

And we need to create the right incentives for private capital to be shifted to where it is most needed, while making it more difficult to continue financing activities that are causing significant harm.

Expectations are high. We had more than 650 responses to our recent public consultation on the Renewed Strategy. We’re still working through the responses but it’s clear that a significant majority want major additional policy actions.

(Conclusion)

So, thank you once again for inviting me to your conference.

We have an opportunity as we carefully map our way out of the crisis and into recovery. We can embrace the digital and green transitions in our recovery and into the future.

You, as retail investors, have an important role to play: by providing financing to the market, which can be channelled into a greener and more sustainable tomorrow.

But you can also help by making your voices heard – speaking both to the companies in which you invest, but also to us, as regulators, who set the framework.

I am looking forward to listening to your views and understanding how we can confront these challenges together.

The development of capital markets, making them more accessible to retail investors, while at the same time becoming green and sustainable: these are complementary – not contradictory – goals.

Thank you for your attention.