Ahead of the Renewed Sustainable Finance Strategy

With the adoption of the Sustainable Development Goals (SDGs) and the Paris Agreement, the discussions on sustainable finance started to gain traction. One of the reasons for this was the realization that the achievement of the commitments and ambitions required bridging a substantial investment gap. Therefore, efforts were needed to steer not only public but also private investments towards realizing the ambition of sustainability – but how?

The answer came in the form of the 2018 EU Action Plan: Financing Sustainable Growth, where through three main goals and ten actions, the first steps of a sustainable finance strategy were set. In 2019, just a little over a month after the new European Commission has started its work, another milestone was revealed – the European Green Deal, seen as the new growth strategy for the EU.

Back to the future

Fast-forwarding to today, we are now awaiting for the Renewed Sustainable Finance Strategy to be revealed before this years´ summer break. The Strategy aims to find a common ground between the ongoing work with sustainable finance, largely based on the Action Plan; the new policies foreseen with the European Green Deal; and the new realities imposed by the COVID-19 pandemic. We often hear that the orientation of the new strategy will go from ´greening finance´ to ´financing green´ while promising to ensure a just transition for all affected.

Turning commitments into actions

The list of expectations and possibilities deriving from sustainable finance and the upcoming Strategy is long. One of the overarching priorities for NFU in this process has been to lift the positive role of finance sector employees and trade unions in sustainable finance – and their capability to act as catalysts in advancing the sustainability efforts.[i]

Additionally, some of the key opportunities to be seized and challenges to overcome with the Renewed Sustainable Finance Strategy include:

– Positive attitude towards sustainability issues in a wider context – the awareness and importance on questions such as climate change, environmental issues, working conditions and equal opportunities has increased among Europeans[ii]. The interest in sustainable investments is also on the rise. In the Nordic countries in addition to green bonds, the interest in social bonds has increased particularly during the pandemic[iii].

– Competence – the need for sustainable finance-related competence among all actors in the financial sector, including regulation and supervision, is high and much needed. Training schemes for finance sector employees, particularly in advisory functions, which are employer-supported, quality and continuous, together with sufficient time and resources are a key step for achieving the wanted effects and results from the sustainable finance agenda.

– Holistic approach – as most of the efforts currently have focused on climate and environmental (E) issues, far less attention was given to social (S) and governance (G) discussions. We have been strongly advocating for a holistic approach where E and expect to see more being done on S and G, as well.

– Policy coherence and data needs – as different sustainable finance files have been developed at different times, it is essential that better policy coherence is ensured, moving forward. This is to both make sure that similar issues are not being reported multiple times, but also to make sure that enough attention is placed on having sufficient and quality data, particularly on social and labor questions, which have been less developed in non-financial reporting so far[iv].

 ´This is an Agenda of unprecedented scope and significance …´

Sustainable finance and sustainability questions are here to stay, and it is positive to see the many initiatives, investments and projects pioneered by different stakeholders. The ambition and impact of actions will need to accelerate, globally, in order to achieve the promises made back in 2015, and the Renewed Sustainable Finance Strategy will play a significant role in that process.

Vasilka Lalevska
Head of EU Affairs, NFU

[i] NFU´s response to the public consultation here and NFU Policy Paper on Sustainable Finance here

[ii] Eurobarometer, Future of Europe, March 2021 here and Eurobarometer, Social issues, March 2021 here

[iii] Climate Bonds Initative, Special Regional Report Nordics here

[iv] European Commission – Summary Report on Corporate Sustainability Reporting here