Converging, interconnected issues, including the changing finance landscape, have brought sustainable finance and the Sustainable Development Goals (SDGs) to the fore as a unifying global agenda for countries, companies, investors and civil society to pursue. Following on from the Report by the High Level Expert Group, the European Commission Sustainable finance Action plan and the High level conference in March, the European Bank for Reconstruction and Development (EBRD), ACCA (the Association of Chartered Certified Accountants) and Barclays organised a timely conference to discuss the Action Plan proposals, and the alignment of business strategies and corporate reporting contribution in meeting the SDGs and sustainable finance objectives.
Alexia Latortue, Managing Director, Corporate Strategy, EBRD opened the conference: “There are three specific areas where the EBRD can help support the sustainable finance action plan: the development of a taxonomy; upgrading disclosure rules and making sustainable risks more transparent; as well as the development of the EU Green Bonds Standard.
“The SDGs are much broader than any previous goals and reflect our European and human values. They are comprehensive and represent an ambitious vision. Achieving these goals will require the involvement of the private sector. And not just its money. The agenda also requires the specific skills, the discipline, the creativity, the innovation, the solutions of the private sector. We need serious business propositions and skills of players from all backgrounds”.
Speakers highlighted that the Sustainable Finance Action Plan is an important milestone, which can help trigger further growth and recognition through clear signals. Access to better quality data, a common sustainability language – the taxonomy - and enhanced standards for transparency and accountability standards will improve the functioning of European markets for sustainable investments. But it was stressed that truly ensuring a rapid and well-managed transition to a low-carbon economy will require a broader overhaul of public policies, such as taxes and subsidies on energy, a ‘real’ carbon price integrating all externalities and incentives for industry to move their production and supply chains towards more sustainable models.
All actors - policy makers, regulators, supervisors, private sector and civil society - need to play their part. To make the economy greener and solve global challenges, the involvement and contribution of companies, which play a key role in the energy transition and reporting processes, is crucial.
Participants also heard that sustainability goes hand in hand with transparency. The European Union is working on a step by step process, building on existing initiatives such as the SDGs, national measures, existing non-financial reporting standards, existing voluntary industry transparency and reporting initiatives. Yet, the existing diversity of reporting frameworks can lead to complexity, affecting the coherence and comparability of data. The EC Action Plan item #9 and the EC Fitness Check on corporate reporting aim to address the issue. Some called for a flexible approach based on voluntary initiatives and experimentation, also promoting a good corporate governance culture, but there was also a clear call from others for more binding measures.
Heidi Hautala, MEP, and Vice-President of the European Parliament said: “Responsible business conduct is a prerequisite in achieving the SDGs and the 2030 agenda. If we want to change the world we have to change the rules. The Commission’s Action Plan is a good start. We are getting closer to a tipping point and the time has come for a mandatory due diligence legislation at the European level, that would give all companies a level playing field. I believe we have elements in place for a more sustainable future. We just need to make decisions that are ambitious enough”.
Rhian-Mari Thomas, Managing Director and Chair Barclays Green Banking Council, added: “Green, sustainable finance is the future of finance and bold policy measures, such as those set out in the EU’s Action Plan, will be needed to achieve that transition at pace. In particular, high-quality, actionable data, the lifeblood of the financial markets, needs to enable investors to make informed decisions about the impact of climate change on risks and returns. It is key that policy-makers ensure the swift, widespread and successful implementation of the FSB’s TCFD recommendations by requiring mandatory disclosure on a comply and explain basis”.
It was also recalled that the UN 2030 Agenda and Sustainable Development Goals and the Paris Climate Agreement need each other, and that SDGs are an Integrated Agenda. Sustainability needs moving forward with all 17 goals, with a coherent and holistic approach, not only focusing on climate actions, but concerning equally social and human rights. Reporting is a key tool to provide data on enterprise performance, including in the area of their SDG related activities and impacts, but there is a need to enhance quality and comparability of reporting in this area, its consistency with financial reporting frameworks, and users expectations.
Jimmy Greer, head of sustainability at ACCA and author of Sustainable Development Goals: redefining Context, Risk, and Opportunities concluded: “The challenge of meeting the SDGs by 2030 is immense. A critical factor in the SDGs success will be their mainstreaming as real-world prosperity benchmarks, so that new opportunities can be realised, and that their delivery becomes embedded into business practices through effective monitoring, and balanced reporting on genuine progress towards achieving them. The SDGs are set to be a defining challenge for business, the finance industry and the accountancy profession for the coming years”.
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