AFME Sustainable Finance Key Impacts

On Nov. 22, AFME issued report on sustainable finance in Europe.

  • AFMA published a new report, prepared with Linklaters titled Sustainable Finance in Europe: Regulatory State of Play, providing key impacts for banks and capital markets.
  • Follows AFME Oct. 2021 welcomed UK GVT roadmap on green finance, see #118958.
  • Also AFME Apr. 2021 stressed the importance of sequencing obligations, see #103677.
  • Overview
  • The report provides practical guide to the significant number of initiatives which make up the regulatory framework for sustainable finance in the EU, UK and Switzerland.
  • It highlights how the banking sector is impacted and makes recommendations to further the goal of further developing the availability of sustainable finance in Europe.
  • It also provides analysis and identifies key milestones and actions for banking industry in the five key elements of the European sustainable finance regulatory framework.
  • These include sustainability reporting and disclosures, development of taxonomies for sustainable activities, development of market standards, incorporation of ESG into banks’ risk management and initiatives relating to sustainable corporate governance.
  • Priority Areas
  • AFME assesses current state of play of European regulatory framework and highlights three priority areas to facilitate flow of capital to help achieve sustainability objectives.
  • The first is finalizing effective foundations and while significant progress has been made, it is important to finalize and implement effective regulatory building blocks.
  • This will develop disclosure framework for sustainability reporting, provide a common classification system of activities, and ensure all ESG risks are effectively integrated.
  • Secondly, ensuring coherence and consistency to drive a path through the very large number of initiatives have been put in place in a short space of time, to be consistent.
  • While recognizing urgency of task at hand, it is necessary to ensure the framework is coherent and consistent, particularly as many aspects are complex and interconnected.
  • The third area is strong international coordination, as climate change and sustainability objectives are global challenge which will need internationally coordinated response.
  • In order to maximize benefits of sustainable finance, it is vital to leverage international capital markets, with a coherent approach to multinational businesses and institutions.
  • Comment
  • The MD for sustainable finance at AFME, Oliver Moullin, believed important progress had been made on regulatory framework for sustainable finance, with more to do.
  • The report provides practical guide for banks, helping them and their clients navigate the various initiatives, highlighting recommendations in support of the crucial goals.
  • The global head of environment and climate change at Linklaters, Vanessa Havard-Williams added that momentum is building globally in the field of sustainable finance.
  • Market participants face both opportunities and challenges in navigating an evolving legal and regulatory framework and report will help to understand shifiting landscape.

Regulators AFME
Entity Types Bank; BHC; CNSM; Corp; Inv Co
Reference Rp, PR 11/22/2021; ESG
Functions Compliance; C-Suite; Financial; Legal; Operations; Product Design; Reporting; Risk; Suitability; Technology; Training; Treasury
Countries European Union; Switzerland; United Kingdom
Products Banking; Corporate; Fund Mgt; Loan; Securities
Regions EMEA
Rule Type Guidance
Rule Date 11/22/2021
Effective Date 11/22/2021
Rule Id 122133
Linked to Rule :118958
Reg. Last Update 11/22/2021
Report Section EU

Last substantive update on 11/24/2021