Europe’s green finance framework must do a better job of identifying investments that contribute to a just transition to a sustainable economy, according to a new regulatory roadmap. The recommendations, made by the European Sustainable Investment Forum (Eurosif), also included a call for a strengthening of the tools that enable investment in a just transition, as well enhanced investor stewardship and engagement “to incentivise and support the sustainable transition of the companies they invest in”. The Eurosif report said there was a need to scale-up investments accelerating sustainable growth and a just transition to a resilient and low-carbon economy, listing a series of policy actions underpinning each of its recommendations. These included clearer definitions for sustainable, transition, and impact investments, as part of the Sustainable Finance Disclosure Regulation review, as well as the development of an EU social investment standard. The association said a just transition to a sustainable and resilient economy would enable the EU to address intensifying challenges – including protectionism, conflict, and climate crises – while maintaining financial stability, reinvigorating economic growth and competitiveness, and guaranteeing strategic autonomy. But it warned that the private sector capital needed to achieve these goals could only be secured via a sustainable finance regulatory framework that is “coherent, sufficiently ambitious, usable, well-implemented and complete”. “While public support and funding is essential, private finance remains key in bridging the current investment gap,” said Eurosif Executive Director Aleksandra Palinska. “We urge EU policymakers to heed the recommendations set out in this roadmap and to consider the enormous economic and societal risks of inaction when compared to the significant benefits and advantages of delivering sustainable growth.”
