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Caroline Lambert Climate and Environment Counsellor Delegation of the European Union to Australia

28 February 201 Melbourne University. Caroline Lambert Climate and Environment Counsellor Delegation of the European Union to Australia. Taking stock: EU vision.

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Caroline Lambert Climate and Environment Counsellor Delegation of the European Union to Australia

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  1. 28 February 201 Melbourne University Caroline Lambert Climate and Environment Counsellor Delegation of the European Union to Australia

  2. Taking stock: EU vision "A low-carbon, resource-efficient and increasingly circular economy characterised by high employment, technological innovation and sustainable growth. "

  3. Taking stock: (some) EU goals Headline targets, climate and energy -20 %* Greenhouse Gas Emissions 20% Renewable Energy 20 % Energy Efficiency 10 % Interconnection 2020 ≤-40 %*GreenhouseGas Emissions (domestic) 30-40% Renewable Energy **  30-40% Energy Efficiency ** 15 % Interconnection 2030 * % compared to 1990 ** still being legislated, initial proposal was 27%

  4. Taking stock: investment needs Required yearly investments in the EU:

  5. This presentation • High Level group findings • Early action in the EU so far • High Level group recommendations • EU's forthcoming action plan

  6. A. Findings Why is private finance failing sustainability? • Weak or inconsistent policy signals • "Tragedy of the horizon" • Weak risk assessment and management • Incomplete sustainability toolkit • Low level of sustainability literacy

  7. Result of public consultation A sustainable financial system … 1. Considers the full value of financial assets. 2. Is productive, serving households, firms and governments in their projects and needs. 3. Is resilient 4. Demonstrates alignment with the sustainability preferences of its users 5. Takes a long-term perspective

  8. B. What the EU has done so far … • Support to consistent policy signals • Smart use of public finance • Early financial sector reform

  9. 1. Policy signal support • EU legislation increasingly supports consistency: • ETS • Energy and climate governance framework • Review of renewables support schemes rules • New idea of political and regulatory de-risking financial instruments such as Renewable Energy Cost Reduction Facility (RES-CRF) • Increase pipeline of projects via smart public finance

  10. 2. Smart use of public finance • EU Budget: mainstreaming targets /climate-specific budget • EIB's European Fund for Strategic Investment 40% of the €500bn Fund earmarked for climate projects by 2020 (guarantee from EU budget and EIB own capital) • Revenues from ETS: formerly NER 300 Fund, now Modernisation Fund and Innovation Fund • Announcements at One Planet Macron Summit Dec 2017: increase pipeline of projects: • Urbis and Global Urbis • Clean Energy for Islands • Clean industrial technologies • Smart Finance for Smart Buildings • Just transition for coal and carbon intensive regions

  11. 3. Financial sector regulation so far • Public investments in certain energy efficiency schemes can be done off-balance sheet (Revision of EU accounting standards). • Over 6000 large listed companies are required to assess and disclose sustainability risks from this year (Non-Financial Reporting Directive). • Certain types of pension funds must include environmental and social factors in their risk management systems (Institutions for Occupational Retirement Provision Directive) • Some pension funds and insurance companies have to establish and disclose their environmental and social governance engagement policy (Shareholder's rights Directive II) • Lower capital requirements for certain infrastructure investments by insurance companies (Revision of Solvency II directive). • Retail investors to be informed about environmental or social objectives targeted by investment products (Package Retail and Insurance-based Investments Products Regulation).

  12. C. Priority recommendations • Providing trust in green financial products • Providing better and more finance for sustainable development

  13. 1. Providing trust in green financial products • A common sustainable finance taxonomy to ensure market consistency and clarity on what is ‘green’, 'low-carbon' or ‘sustainable’ etc… • Creation of official European sustainable finance standards and labels, starting with a green fund label and a green bonds standard • To improve citizens/retail investors access to information on sustainability performance

  14. 2. Providing better finance and more finance for sustainable development • EU omnibus legislation across entire investment chain to clarify investor duties, to link their time horizons to the institutions or individuals they serve and to require informed consent on sustainability issues. • To upgrade Europe’s disclosure rules • To strengthen director duties and stewardship principles • To include the promotion of sustainable finance in the mandate of Financial Supervisory Authorities

  15. D. Forthcoming EU Action Plan To betabled March 2018 To includeinter alia: • Taxonomywork, EU Green Bond Standard • New investorduties and disclosurerules • Lowered capital requirements for e-vehiclesloans, energyefficiencymortgages • New sustainability mandate for supervisoryauthorities • International advocacywork

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