Sustainable finance: five proposals to improve the EU regulatory framework

In recent years, the European Union has made significant efforts to promote sustainable finance, aiming to direct capital towards economic activities aligned with climate goals. However, as highlighted by an analysis from the think tank Bruegel, there are still challenges hindering the development of the EU's ESG (Environmental, Social, and Governance) finance framework.

The report “How to improve the European Union’s sustainable finance framework” by Bruegel comes at a time when the spotlight is already on European sustainability regulations. Just yesterday, Brussels presented the “Simplification Omnibus Package”, a proposal by the EU Commission aimed at revising and simplifying the European regulatory context to benefit businesses, which will enjoy streamlined rules on sustainable financial reporting, ESG due diligence, and the Taxonomy.

More specifically, after thoroughly analyzing the effectiveness of the European regulatory framework on sustainable finance, the Belgian think tank proposes some solutions to address the contingent and structural weaknesses of EU regulations. Improvements in this regard would ensure effectiveness in aligning capital flows with climate goals.