The EU's sustainable finance agenda: recommendations for a fair and competitive transition

Amidst a backdrop of urgent climate imperatives, the European Union is navigating through a transformative era in sustainable finance. Friends of Europe’s latest report, “Strengthening the EU’s Sustainable Finance Agenda,” delves deeply into finance’s crucial role in the transition towards a climate-resilient and net-zero future. This study draws from intensive discussions involving distinguished stakeholders from the EU institutions, the private sector, academia and civil society—revealing a multifaceted view of the challenges and opportunities within the EU’s financial framework for sustainability.

The report critically examines the current pace of Europe’s financial adaptations to climate imperatives. With the European Commission estimating a staggering annual investment of over €620bn needed to meet the Green Deal and REPowerEU targets, the question arises: Is the EU’s financial sector equipped to handle this monumental task? This inquiry forms the bedrock of the discussions, pushing for a strategic overhaul of the financial pathways that support Europe’s green transition.

As the EU stands at this critical juncture, the publication provides a snapshot of current initiatives and serves as a rallying cry for enhanced cooperation and innovation in sustainable finance. It addresses how to bridge the significant investment gaps and realign capital flows to support and accelerate the transition towards low-carbon, sustainable economic models.

Ambitious policy frameworks like the Green Deal fuel Europe’s journey toward a sustainable future. However, as encapsulated by a key policymaker during recent deliberations,

The study outlines a set of action-oriented recommendations to strengthen the EU’s financial readiness to support a robust and just green transition ahead of the next EU mandate.

This comprehensive review of Europe’s sustainable finance landscape underscores the importance of a cohesive strategy that includes enhancing transparency in corporate reporting, mainstreaming sustainability in risk management and fostering an investment environment that prioritises long-term environmental goals. This report is an invitation to policymakers, financial experts and stakeholders across Europe to intensify their efforts and collaborate on developing a financial ecosystem that is fit for the purpose of achieving Europe’s ambitious environmental objectives.

One report, three recommendations, one minute:

Related content:

Between October 2023 and February 2024, Friends of Europe brought together cross-sector stakeholders involved in the development of EU sustainable finance policy for three bespoke engagements to develop the above report.

• Event | Reframing finance: a systems-led approach to sustainable investment
• Event | Shifting investor preferences and de-risking sustainable investment
• Event | Aligning capital investment with the European Green Deal

Interested in listening to the report’s findings? Listen to our Policy Voices Podcast episode.

• Policy Voices | What will it take to keep the EU’s sustainable finance agenda alive?