The European Commission should create more tools to help investors and companies get to grips with climate transition plans, its advisors have said.
In a report published on Thursday, the European Union Platform on Sustainable Finance (PSF) told policymakers that financial market participants would benefit from a “checklist” outlining what they should consider when assessing corporate decarbonisation strategies.
“The checklist should be based on existing EU sustainability transparency requirements, and should not lead to additional reporting for companies,” the group stressed in its recommendations.
Speaking to IPE, Helena Vines Fiesta, the chair of the PSF, explained: “It would be a template for companies, with different building blocks.”
“It doesn’t mean that a company has to fill out every part, but it means the parts they do fill out are all in one place. It simplifies the life of companies, and financial market participants can see how it all fits together,” she added.
PSF also asked the Commission to develop a set of criteria to help establish expectations for credible science-based targets. Such targets should be based on the Paris Agreement, cover all emissions in the value chain, across all timeframes, and be grounded in the right sectoral context, it said.
In 2023, the Commission published guidance on how the private sector could use existing EU frameworks and disclosures to address the climate transition – rather than restricting their ‘green’ investments to assets and activities that were already decarbonised.
At the time, it identified a number of credible types of transition finance, including investments that track the EU’s Paris Aligned Benchmarks, capital expenditure that aligns with the EU Taxonomy, and entity-level funding for companies with science-based transition plans and targets.
The PSF is currently pushing for the creation of an EU-wide categorisation system for ‘sustainable’ financial products, to replace the current Sustainable Finance Disclosure Regulation regime. One of the categories it has recommended is dedicated to strategies that target “transition”, based on the Commission’s 2023 definitions.
“One of the intentions of this report on transition is to help move towards a better understanding of what should be considered robust and credible, and what tools are needed to make this process easier for financial market participants,” said Vines Fiestas.
She added that the recommendations were aimed at various units of the European Commission, not just those responsible for financial regulation, because they relate to decarbonisation strategies and sectoral pathways in the real economy.
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