Regulating Sustainable Finance in Europe
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Regulating Sustainable Finance in Europe
(2024)
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Tadas Zukas is Global Lead Senior Legal Counsel Sustainability/ESG at Vontobel in Zurich, Switzerland, and a Fellow at Zurich University’s Center for Sustainable Finance and Private Wealth. The author holds a Ph.D. in law from the University of Lucerne, an LL.M. and an executive CAS Sustainable Finance degree from the University of Zurich. Zukas publishes and speaks on regulatory sustainable finance topics and also teaches at Zurich University’s executive sustainable finance education programme. His work has been featured on the pages of the New York-based »Pensions & Investments« magazine and in the Green Hub Sustainable Conversations series of the London-based global legal rankings directory »Legal 500«.Abstract
The European Sustainable Finance Action Plan marked its 5th anniversary in 2023. Since its publication in 2018, the Action Plan reshaped the European sustainable finance. It has also substantially impacted the European and global sustainable finance debate. As this book goes to publication, the Action Plan’s four key regulations are now all in force. The sustainable finance market is also in the process of reaching a new level of maturity in tackling greenwashing. The new European regulatory architecture for sustainable finance is getting closer and closer to its conceptual completion. The book offers an in-depth overview of this new emerging field of European law. It starts with a discussion of the purpose and underlying principles of the new European regulatory framework for sustainable finance, proceeds with an analysis of the four key regulations that have emerged out of the Action Plan’s legislative agenda and closes with a section on tackling greenwashing.The European Sustainable Finance Action Plan marked its 5th anniversary in 2023. Since its publication in 2018, the Action Plan reshaped the European sustainable finance. It has also substantially impacted the European and global sustainable finance debate. As this book goes to publication, the Action Plan’s four key regulations are now all in force. The sustainable finance market is also in the process of reaching a new level of maturity in tackling greenwashing. The new European regulatory architecture for sustainable finance is getting closer and closer to its conceptual completion. The book offers an in-depth overview of this new emerging field of European law. It starts with a discussion of the purpose and underlying principles of the new European regulatory framework for sustainable finance, proceeds with an analysis of the four key regulations that have emerged out of the Action Plan’s legislative agenda and closes with a section on tackling greenwashing.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Preface | 5 | ||
| Table of Contents | 7 | ||
| I. Introduction | 9 | ||
| II. Blueprint of the New Regulatory Architecture: The European Sustainable Finance Action Plan of 2018 | 12 | ||
| 1. The Three Targets: Capital, Risk, Transparency | 12 | ||
| 2. The Ten Action Items: Reshaping the World of Finance | 15 | ||
| 3. Defining “Sustainable Finance” | 18 | ||
| a) What Falls under “E”, “S”, “G”? The Action Plan’s Guidance | 19 | ||
| b) The Role of “G” | 19 | ||
| III. Europe’s Transparency and Anti-Greenwashing Regime: The Sustainable Finance Disclosure Regulation | 22 | ||
| 1. SFDR’s Scope: Entities, Processes, Products | 22 | ||
| 2. “Let’s Talk Sustainability”: The Legislative Method | 26 | ||
| 3. Legislator’s Purpose: Transparency and Anti-Greenwashing, Not Labelling | 28 | ||
| a) Signal | 30 | ||
| b) Signal | 31 | ||
| c) Signal | 31 | ||
| 4. Defining “Sustainable Investment” | 33 | ||
| 5. The Concept of “Sustainability Risk” and its Role | 34 | ||
| 6. Entity Level Sustainability Disclosures | 37 | ||
| 7. Financial Product Level Sustainability Disclosures | 40 | ||
| a) Product-Level Sustainability Disclosures: The Strategy of Small Steps | 40 | ||
| b) General Remarks on SFDR-Article-Product Categories | 46 | ||
| 8. Marketing Communications | 51 | ||
| IV. Europe’s “Green Vocabulary”: The Taxonomy Regulation | 52 | ||
| 1. “Let’s Get Technical” | 52 | ||
| 2. Defining “Environmentally Sustainable Investment” | 53 | ||
| 3. TR/SFDR Interplay | 56 | ||
| 4. TR/NFRD Interplay | 59 | ||
| V. Centrality of Client’s Choice: MiFID II and the New Duty to Inquire on Client’s Sustainability Preferences | 62 | ||
| VI. More Data for More ESG: The New Corporate Sustainability Reporting Directive | 68 | ||
| 1. Importance of Quality ESG Data for the Sustainable Finance Effort | 68 | ||
| 2. Context and Starting Point: NFRD’s “Old” Corporate ESG Reporting Regime | 69 | ||
| 3. Laying the Foundation for CSRD: The Action Plan‘s “Fitness Check” of NFRD | 70 | ||
| 4. CSRD: Europe’s New Corporate Sustainability Reporting Regime | 72 | ||
| VII. Tackling Greenwashing | 84 | ||
| VIII. Concluding Observations | 90 | ||
| List of References | 93 | ||
| Laws, Regulations, Official Documents | 94 |