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I am delighted to be with you today, even if only virtually. It is my great pleasure, as the new Commissioner for Financial Services, Financial Stability and the Capital Markets Union, to open this first meeting of the Platform on Sustainable Finance.

This is my first speech as Commissioner. It feels very appropriate as sustainable finance is and will be one of my key priorities.

Bigger picture - towards a renewed strategy on sustainable finance

As I said in my European Parliament hearing, the future will be green and digital, and will require fundamental changes. We are in a climate emergency.

The Covid-19 crisis cannot be used as an excuse to delay addressing the challenges of climate change, environmental degradation and biodiversity loss. The EU is committed to achieving climate neutrality by 2050. We are increasing our 2030 emission reduction target and this requires mobilising at least half a trillion euros per year of additional investments in the EU. Climate and environmental objectives and risks must be integrated into the financial system.

The fundamental role of the financial system is to finance the real economy for the benefit of our citizens and our planet. The financial system will need to provide the financial resources to make the transition actually happen.

But this transition is not happening fast enough: the rules of the game must be transformed, to integrate sustainability at every step of the financial value chain. We need a complete rethink.

A renewed Sustainable Finance Strategy is being prepared and will be put forward in 2021. Let me outline three key aspects of the strategy:

  • First, the strategy will need to be ambitious: climate change and environmental degradation are the biggest issues facing humanity. Our future depends on getting this right.

  • Second, we need a more comprehensive strategy. There is no silver bullet to pivot our system towards sustainability. A wide range of policies will need to be consistently implemented to have a systemic impact on our financial systems and economies.

  • Third, the strategy needs be concrete with clear deadlines. Time is running out to put our financial system on the right path to reach our 2030 and 2050 targets.

Feedback we received to the consultation we organised in the summer shows that:

  • out of 650 responses, around 60% call for major additional policy actions; 34% call for incremental additional action.

We are now identifying the best ideas from the consultation in order to inform the strategy.

Expectations from citizens, companies and financial institutions are extremely high.

I am committed to deliver an ambitious Renewed Sustainable Finance Strategy to put the financial system on track to achieve our climate and environmental objectives.

Now, turning to our meeting today. The Platform and all the work that you will do here is an essential part of our efforts to make sure we’re delivering on our commitment that private sector money contributes to the green transition.

The Platform on Sustainable Finance

So first let me congratulate all of you for being selected as members of this Platform. You were chosen among more than 500 very good applicants for your expertise and your capacity to support the Commission to address some of the most difficult sustainable finance challenges.

A lot has been achieved in two years - but so much more still needs to be done.

The Taxonomy Regulation adopted earlier this year will provide the necessary clarity and guidance to identify genuinely sustainable investments. It will enable companies, banks, insurers, pension funds, and investment funds as well as corporates to identify which activities and investments are sustainable.

To make it operational, detailed screening criteria corresponding to each of the six objectives which underpin the Taxonomy will need to be fleshed out.

In the Commission we are starting with the climate adaptation and climate mitigation objectives. The Technical Expert Group, which played a vital role in assisting us over the past two years, has issued recommendations on those objectives.

The Commission is now translating those criteria into a delegated act - which will be published soon for feedback. And the Platform will be consulted as well. We want to adopt the delegated act by the end of the year.

We will then need to develop specific criteria for the other four environmental objectives, beyond climate:

  • the sustainable use and protection of water and marine resources;

  • the transition to a circular economy;

  • pollution prevention and control; and

  • the protection and restoration of biodiversity and ecosystems.

This is where your expertise is essential:

  • First, we need to give a clear indication about what activities make a substantial contribution to sustainable water use, circular economy, pollution prevention and biodiversity, while doing no significant harm to the remaining objectives. This is vital to increase investments in these activities and it is your most urgent task. The Commission will need to finalise the EU Taxonomy for environmentally sustainable activities by the end of 2021.

  • Citizens are at the heart of our efforts. We can’t forget the social: the “S” of ESG (environmental, social and governance). It is hard to solve climate change without addressing social concerns. You are asked to assess whether and how a social taxonomy could address some of the challenges related to the achievement of social objectives.

  • Third, the success of the green transition depends on the efforts some sectors need to make in transitioning and in the phasing out of environmentally harmful activities. Financing green activities is essential and the taxonomy regulation provides the tools to do so. Supervisors, some investors and companies are asking for support to transition away from harmful levels of environmental performance. We need your expertise to assess whether we need to expand the scope of the Taxonomy Regulation to ensure a classification system to support the transition of economic activities in relation to achieving environmental objectives. This issue is sensitive and your advice will be crucial.

  • Finally, we need reliable data to build a functioning and efficient system. And we need to ensure that data flows to where it is needed. We need to connect data providers, companies and data users, investors. We need to make sure that the taxonomy is as user friendly as possible. We want to make sure that taxonomy is perceived as a very useful instrument, rather than a regulatory constraint creating burdens.

Over the next two years, you will support the Commission in shaping sustainable finance in the EU. It is an exciting task and an important responsibility. We are relying on you to provide substantive and science-based advice to the Commission to make the European Green Deal as successful as possible.

I am confident that your broad spectrum of expertise and background will allow the platform to achieve its goals.

Nathan Fabian, the Chair of the Platform, has excellent credentials and leadership skills. You could not be in better hands. Nathan led the work on the taxonomy in the Technical Expert Group and did a remarkable job.

Nathan and all the rapporteurs have our full trust to steer the work in the right direction. Nathan, thank you very much for having accepted the role of the Chair and I look forward to meeting you and the rapporteurs soon.

International cooperation

Finally: the EU cannot achieve the green transition alone. We need other countries to share our ambition and work in the same direction. Thankfully, other major jurisdictions are mindful of this urgency.

Along with the other 13 members of the International Platform on Sustainable Finance - representing around half of the world’s GDP, emissions and population - we will publish our first public report tomorrow.

The report is encouraging: we are significantly aligned in our goals and understanding, and share a commitment to work together toward comparable frameworks for taxonomies, standards and labels for green financial products and disclosure. But more needs to be done.

There is no isolated solution to a global challenge. We are determined to maintain our commitment to working internationally in the year to come, both in the IPSF and during COP26.

Conclusion

To conclude: the magnitude of the challenges ahead of us is clear. The solution will not come from either companies, or financial institutions, or policy-makers alone.

The solution can only come from in-depth collaboration and strong partnership between the private sector and the public sector, bringing together experts from all relevant areas. This Platform is an outstanding example of this, and I believe that your work can have a transformative impact in Europe and beyond. I wish you all a very fruitful first meeting.