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Eurosif's 2017 in review
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Dear SRI reader,

When, in 2015, France imposed ESG and climate reporting requirements on asset owners and asset managers by deploying Article 173-VI of the French Energy Transition for Green Growth, the industry probably did not immediately perceive the tsunami effect it would have on the financial industry and beyond. A year on, a first assessment of its implementation showed that players in the industry are stepping up to the challenge, despite the difficulties encountered in setting quantitative objectives within a clear timeframe. Some blind spots do seem to remain due to a certain and somewhat generalised lack of correlation between portfolio carbon footprint and climate risk management from the respondents. The integration of ESG and climate factors into investments still mainly remains an issue better tackled on a corporate, rather than sovereign, level while there is still strong evidence of a general lack of impactful communication regarding targets between issuers and investors and between asset managers and asset owners.

Given the fact that methodological approaches are not yet standardised, there is not yet a feeling of consensus and the diverse range of technical possibilities leaves investors rather perplexed. Third-party agencies that focus on sustainability reporting clearly showed their experience in this exercise and, to a certain extent, this demonstrated their capacity to hamper the ability of institutional investors in getting directly involved in reporting issues and taking the lead in this space. Sure, there is still some room for improvement and like for all other things in sustainability, it is a journey. What is certain, is that Article 173-VI represents a competitive advantage for French players, as it helps them learn and get accustomed to managing climate-related risks and opportunities. Other countries would certainly profit from introducing similar legislation, ensuring that there is a healthy level of competition and no one falls behind. In a recent survey of the 15 largest European banks, this evidence came through particularly well as French banks appeared in the top five, while three of the UK banks ranked among the bottom five. The difficulties encountered in the UK are shared by other European banks of course, who need to step up their game and collaborate with institutional investors to engage with policymakers and regulators. Players across Europe should perceive the value of sustainability and ensure consistency in their ambitions to secure a place for their financial centres, particularly considering today’s focus on ‘green financial centres’. Some time ago, this could have been considered as wise foresight. Today, it is just business as usual, and therefore, the consequences for not following this lead will be extremely dire.

2017 is now drawing to a close and while recognising that much was achieved in sustainability this year, we look to 2018 in the hope that it will bring even more. Europe is certainly well placed as the hub for continuous innovation in sustainability and we do hope it will continue to thrive. The position agreed at an EU energy council meeting in Brussels this week could cast a shadow on this bright future. The decision was in favour of allowing existing power plants with emissions either above 550g of carbon dioxide/kWh or 700kg CO2 on average per year per installed kW to receive capacity payments through 2030. Ministers weakened the Commission’s efforts to limit public money going to coal, as they gave themselves much more power to decide if they need a capacity mechanism, while existing coal plants would be able to receive these payments for an additional decade, all the way up to 2035. Criticised by Commissioner Miguel Arias Cañete, the Council’s position will go forward to trilogue meetings with the Commission and Parliament next spring. We hope that things will be reconsidered by February 26, when energy ministers will have to confirm their preliminary agreement on the full Clean Energy for all Europeans package.   

Happy Holidays!

Flavia Micilotta and the Eurosif team
HLEG

Announced in December 2016, Eurosif’s Executive Director, Flavia Micilotta, joined the European Commission’s High-Level Expert Group on Sustainable Finance. The Expert Group is set to publish its recommendations for a comprehensive EU strategy on sustainable finance as part of the Capital Markets Union early next year. The Commission will draw on these recommendations to determine how to integrate sustainability considerations into the EU’s rules for the financial sector.

On the 13th of July, the HLEG published its Interim Report
Eurosif's Roundtable on the HLEG Interim Report

On the 13th of July, Eurosif hosted a roundtable to mark the launch of the HLEG’s Interim Report. The HLEG Chair, Christian Thimann, introduced its most salient points and explained the core concept which underlines the mandate of the members. The discussion that followed set the frame for the key recommendations and their implications with the stakeholders present.
Key representatives were present, including the heads of EFAMA, PensionsEurope and Invest Europe who were invited to contribute in order to capture their vision and their reflections. Each of the stakeholders expressed their main concerns regarding the main barriers and levers to sustainable finance across industries and players and several key issues were dissected.  
Paving the Way for Sustainable Finance in Europe
 
In October, Eurosif launched its latest report, Paving the way for Sustainable Finance in Europe, an insightful analysis which gathers key players’ views into the work of the HLEG for a framework for sustainable finance.
Built on the input of key representatives, including the heads of EFAMA, PensionsEurope and Invest Europe, who attended Eurosif's roundtable, the report was expanded to include the views of other notable industry players. 
Sustainable Finance & SRI Roadshow

Following the publication of Paving the Way for Sustainable Finance in Europe, Eurosif launched a roadshow across the continent to showcase and discuss the views shared in the report. 

A total of five events, co-organised with SIFs and local players, saw Eurosif's Executive Director, Flavia Micilotta, join national stakeholders to discuss the impact of the HLEG's recommendations on a country by country level. To see the agenda for each event, please click here
Sustainable Finance & Innovation

In collaboration with Invest Europe and the EIB, Eurosif co-hosted a panel discussion, Sustainable Finance & Innovation, on the 23rd of November as part of Invest Week 2017.
Addressing an audience of global investors and their advisors, investment industry influencers, policymakers, and the media as part of Invest Week, the panel discussion focused on unveiling the implications of key determinants in Europe today, such as the future of ESG reporting, labelling, the role of the EU in shaping regulation and how they connect with the work of the HLEG.
The full agenda is available here and you can trace the debate on Twitter with the hashtag #SusFinInnov.
Copyright © 2017 Eurosif, All rights reserved.


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