The European Parliament’s Committee of Economic and Monetary Affairs endorsed on Monday (5 November) a decision that makes it mandatory for all financial market participants, including banks, to disclose sustainability risks and impacts of their portfolio, a move that NGOs say brings the EU one step further in greening its financial system.

“Monday’s vote has set a very high level of political ambition for the next steps of the Sustainable Finance Action Plan,” said Eleni Choidas, European policy manager at ShareAction, a London-based NGO promoting responsible investment.

WWF welcomed the high level of ambition demonstrated by the MEPs, explaining that such disclosure was fundamental to ensure that investors make better-informed decisions about the environmental and social risks they are exposed to, and the impacts they create with their investments.

The two organisations, both involved in the European Commission’s plan for sustainable finance, explained the MEPs’ decision was a step further in gradually making sustainability a mainstream in the financial system.

Sebastien Godinot, an economist at WWF European policy office, said the MEPs understood the importance of mainstreaming sustainability disclosure to all financial market participants and financial products.

“This is necessary to ensure that disclosure does not only focus on the small niche of green financial products. This is what the EU High-Level Expert Group on Sustainable Finance (HLEG) had recommended,” he said.

European momentum

The systemic change of the financial system was the main thread in the HLEG report published on 31 January this year in a bid to put “the EU economy on a more sustainable path.”

Read more at Euractiv