EU financing a Sustainable Economy
The European Commission is a global leader in driving sustainable revolution for humanity. The Sustainable Finance Strategy, EU Green Bond Standard, and EU taxonomy are leadership initiatives in making an international ecosystem for green finance. The commission is now going beyond green to build a sustainable economy through thought leadership measures that encompass more themes within the sustainable ecosystem.
The EU is working to build a resolute sustainable financial framework for transiting to a Sustainable Economy. Sustainable Financial framework three pillars are taxonomy that enunciates on sustainable activities, disclosure guidelines for financial and non-financial companies with investment tools as the final pillar for achieving the 2030 sustainable development agenda. The going ahead for EU ambitious climate action will not be easy. Based on the Communication from the Commission to the European Parliament, The Council, The European Economic and Social Committee and the Committee of the regions Strategy for Financing the Transition to a Sustainable Economy report, the EU will alone need EUR 350 billion per year this decade to achieve its ambitious 2030 emissions target within energy systems notwithstanding an additional EUR 130 billion per year to achieve other environmental goals.
# Levers for Sustainable Economy
The work to improve on the existing EU taxonomy is laudatory in bringing in more themes example biodiversity, sustainable agriculture, natural gas, etc. Under the Multiannual Financial Framework (2021 to 2027) and Next GenEU (NGEU), a total corpus of EUR 100 billion will be invested in biodiversity projects. NGEU plans to raise 30% of its EUR 750 billion capital through the issuance of green bonds showcases a huge focus towards the green label. The idea of various measures by the EU is to impact 23 million SMEs within the EU through enhanced access to sustainability advisory services. The pandemic makes it more difficult for micro and small enterprises to raise capital but at the same time, judicious use of digitalization has helped to improve productivity. The report builds on enhancing and understanding the impact of digitalization services including artificial intelligence, blockchain, big data, and the Internet of things within the gamut of sustainable finance tools. European Single Access Point (ESAP) and the Open Finance Framework, will help to unleash sustainability-related information for a common good. An impetus within the climate adaption is given through increasing insurance coverage through a natural disaster board insurance dashboard European Insurance and Occupational Pensions Authority (EIOPA) fortifies companies against rising natural calamities due to climate change.
An effort to strengthen corporate governance with green budgeting incorporation to better track and monitor climate and biodiversity spending under the 2021-2027 Multiannual Financial Framework and its alignment with the EU’s ambition. Public-private partnership is a key mandate within the seventeen sustainable development goals, the EU EUR 1 trillion mobilization Sustainable Europe Investment Plan aims to attract capital in green label through public and private actors over the next decade. There are many more reformistic enablers for setting the way for ESG focused world.