The EU Strategy for Financing the Transition to a Sustainable Economy, and the rulebook for green bonds will be unveiled next week. They center around the Green Deal to reach net-zero emissions by 2050.
The EU strategy will propose tightening reporting requirements for financial entities, by incorporating climate-related risks into credit ratings and bank capital requirements. It will also enable supervisors to address greenwashing.
The European Commission (EC) will invite the ESMA to assess how ESG factors are incorporated by credit rating agencies and will consider proposing an initiative to make sure those risks are captured by the assessments. The EC will also ask the ECB to conduct regular climate change stress tests.
The strategy paves the way for financing activities such as natural gas during the transition, after Germany and Poland pushed for including it in the taxonomy, despite the resistance of the others member states. Thus, BAU is falling under the agenda of sustainable finance.