Sustainable Finance

Sustainable finance refers to the process of taking environmental, social and governance (ESG) considerations into account when making investment decisions in the financial sector. As part of the EU Green Deal, the financial sector plays a key role in achieving the EU's climate and sustainability goals. To redirect private financial flows towards investments in climate-neutral, climate-resilient, resource-efficient and fair economic activities, the EU legislator has adopted comprehensive packa­ges of measures. 

The new legal framework obliges companies and financial service providers to ensure transparency on the market through binding and extended disclosure obligations at product and company level (CSRD and ESRS for companies, SFDR for certain financial players). The EU taxonomy also defines a general set of rules with implementation standards (delegated acts) for the standardised classification of the sustainability of economic activities. The regulation of ESG rating providers is also currently in the legislative process in order to ensure transparency, comparability and reliability for investment de­ci­sions and product design.

Many companies have already embarked on the path of sustainability and are thus opening up a new, prosperous market. However, investors are also facing challenges in this transformation process, particularly when it comes to fulfilling the new disclosure requirements and designing sustainable finance products. There is still a certain mismatch between the potentially high demand and the supply of EU taxonomy-compliant products. Legal uncertainties and a still unreliable data basis go hand in hand with reputational risks and the risk of legal disputes.