Defining “green” in the context of green finance (2017)
UN’s Sustainable Development Goals and the Paris agreement constitute landmark steps towards sustainable development, a concept aiming at tackling climate change and environmental degradation, while maintaining growth and competitiveness for the economy as well as creating inclusive social systems. This calls for a better alignment of the financial system with EU policies and with the concept of sustainable development in general.
The report, with the EU High-Level Expert Group on Sustainable Finance behind, analyses worldwide efforts on defining ‘green’ in three segments: for green bonds, green lending and green equity investment. It describes tools to indetify green assets and activities through definitions, classifications, ratings etc., while listing and assessing such definitions and sectoral taxonomies. It proposes five EU policy actions – with possible implications – such as the development of a conceptual definiton, a universal- and an EU-specific taxonomy (i.e. ‘what’ is green), a green rating methodology (i.e. ‘how’ green assets and projects are) as well as process criteria (to increase stakeholder involvement), accompanied with feasabiliy assessment and recommendations for concrete steps the EC could take. Data for the study arise from literature review, interviews and a survey with stakeholders of the international financial community, including asset owners and managers, financial service providers, NGOs etc.
Potential of the bonds market for resource efficiency finance (2016)
Green bonds, exclusively using funds raised to finance green projects or assets, can play key role to mobilize liquidity to finance climate, energy and environmental goals as well as the UN’s Sustainable Development Goals in a wider sense. The report presents an analysis of the development and functioning of the green bond market since its start (2007-08), with regard to main actors (issuers, underwriters, external reviewers, investors etc.), players (e.g. Multilateral Development Banks, municipalities, corporations) and sectors with special focus on boosting the market and to promote investments for resource efficiency. Today, green bonds mainly finance renewable energy, energy efficiency and transport projects, while environment-related investments make around 15% (water, waste and pollution). It looks at five key bottlenecks and possible public policy measures to address them (e.g. establishing co-ordination mechanisms, support to the development of a green project pipeline etc.), assessing also regulatory feasibility and expected impacts of six key standardisation measures (e.g. on liquidity and market size), potentially leading towards a common European Green Bond Standard. The study also presents various views of stakeholders on the role of public sector in assisting this market and provides a set of recommendations for the EU and the Member States. A Policy Toolbox presents additional measures on the demand and supply side with nine case studies including EU- and non-EU countries.
Study on the potential of green bond finance for resource-efficient investments (2016)
This report presents an analysis of the development and functioning of the green bond market, including the main actors and sectors, with specific focus on financing investments into improved resource efficiency. It summarizes the key bottlenecks limiting the development of the market in specific countries and sectors. It identifies a set of possible public sector measures to overcome these bottlenecks, supported by examples of good practices. The report also assesses the regulatory feasibility and expected impacts of specific standardization options on the liquidity and size of the market. Finally, the report presents a set of recommendations addressed at the EU and its Member States.
The objective of this report was to provide clarification and policy advice on the integration of environmental and resource efficiency issues into the fiduciary duties of institutional investors (e.g. pension funds, insurance companies, asset managers, etc.) in the European Union.
It clearly established that the integration of environmental factors in the investment policies and decision-making process of institutional investors is compatible with the existing legal framework related to fiduciary duties in all jurisdictions across the EU – as long as it is relevant to financial returns and the management of risk. This is also evident in practice: most of the leading institutional investors in the EU have investment policies that take into consideration social and environmental issues. This study does not see a need for legal changes in relation to fiduciary duty, but instead take action to engage, enable and encourage the entire investment community in the practical aspects of taking environmental and resource efficiency issues into consideration in their investment decision process.
This study explored ways that innovative financing through new instruments and approaches can be used to finance biodiversity and ecosystem services, responding to the needs of the new EU Biodiversity Strategy to 2020. In addition to the EU co-financing, there is still room to engage more actively the private sector (businesses and financial institutions, the utilities sector and municipalities) and to put forward proposals for bankable projects. The study looked to various types of biodiversity projects with a bankable potential, and analyse the project promoters and beneficiaries that can bring forward these projects. The study examined in detail the following 3 intervention areas: Market-based Instruments & Offsets, Establishing Green Infrastructure and Supporting Carbon Credit Actions, while also it looked to a lesser extent the provision of support for biodiversity-friendly businesses. Furthermore it explored 2 cross-cutting issues that are of concern for all type of biodiversity related investments, i.e. how to address investment and policy risks and how to collect and provide market information about biodiversity. Through interviews with market specialists and investors, as well as key stakeholders (EIB and the financial sector) they explored the potential for investment into the respective areas examined and made recommendations on Private finance opportunities in relation to biodiversity and on the European interventions that can bring these about.
Accounting and reporting for the environment has become increasingly relevant to enterprises and their major stakeholders, e.g. investors, creditors, governments and the public at large.
This report surveys the Annual/Financial reports of a large number of companies (mainly EU companies or companies that operate in the EU) with a view to identify best practice and to evaluate the relevance and comparability of the environmental information that is disclosed. The report also recommends ways of improving the reliability, comparability and usefulness of the disclosures. The views of the authors and the recommendations given do not necessarily reflect the views of the European Commission.