First, sustainable finance is multi-dimensional, and therefore an overarching, coordinated EU-wide approach is required to pursue long-term sustainability goals.
Second, it is public authorities’ responsibility to promote policies aimed at correcting market failures. Only public policies that adequately price negative externalities, in particular Co2 emissions, can make sustainable investments profitable on a large scale and therefore trigger the widespread emergence of sustainable assets, without which the financial system cannot be sustainable. Urging policy makers to enforce the adequate pricing of negative externalities and accompanying policies should have been among the top recommendations of the HLEG to EU policy makers.
Third, Finance Watch stresses that many reforms are still required to address financial instability, a key obstacle to long-term investments, and to promote increased diversity of business and governance models in the banking and financial sectors.
Download the note to read our analysis of the specific recommendations from the group.