ESG and Financial Markets: Does Sustainable Finance Constitute a Revolution of the Logics of Financial Markets?

Abstract

At the international level, the Paris Agreement adopted in 2016 under the United Nations Framework Convention on Climate Change seeks to strengthen the response to climate change by, inter alia, making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. At the EU level, in its communication of 8 March 2018, the Commission published its action plan on financing sustainable growth (the 2018 Action Plan), launching an ambitious and comprehensive strategy on sustainable finance. One of the objectives set out in that action plan is to reorient capital flows towards sustainable investment in order to achieve sustainable and inclusive growth. Furthermore, with the adoption of the European Green Deal in December 2019 there has been an acceleration in the policies for a sustainable and green economy. On 17 September 2020 the Commission presented on its 2030 climate target plan, with an increased emissions reduction target of 55% by 2030 as compared to 1990 and underlined that the financial sector has a key role to play in reaching those goals. The EU has taken major steps to build a sustainable finance ecosystem (the Sustainable Finance Disclosure Regulation; the Non-Financial Reporting Directive, the EU Taxonomy Regulation) and is putting forward further legislativ e initiatives to strengthen the legal framework for a sustainable finance. Namely, on 6 July 2021 the Commission published its new Strategy for Financing the Transition. Building on the 2018 Action Plan, the Strategy provides an extension and deepening of the measures adopted and proposes action in four number of areas: transition finance, inclusiveness, resilience and contribution of the financial system and global ambition.