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COP26: Further finance economy updates

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Further updates on the transition in the financial economy, with a common ground taxonomy, international report on disclosure requirements, new Swiss greenwashing and more.

Common Ground Taxonomy

The first step towards a new common set of common principles on green taxonomies was published today by the International Platform on Sustainable Finance (IPSF), an coalition composed of the EU and 17 non-EU countries (not to be confused with the Platform on Sustainable Finance, which is the domestic advisory body to the European institutions).

The Common Ground Taxonomy (CGT) was developed by a working group under the IPSF co-chaired by the EU and China, as is based on areas of commonality between the taxonomical framework in the two jurisdictions. It currently covers substantial contribution criteria for climate change mitigation, with other environmental objectives and eligibility feature slated for possible future scope of work.  The IPSF has called for feedback on the CGT work published to date by 4 January 2022.

IPSF report on ESG disclosure

An overview of ESG disclosure requirements in the IPSF members, Brazil and the US was also published today. The report analyses the key features of both soft policy and regulatory/legislative requirements in the 20 jurisdictions. The stocktake demonstrates several emerging themes on the current state of sustainability disclosure, including the tendency for focus on climate and nascency of product/service level disclosure.

IPSF annual report

The IPSF has published its annual report. The report includes an overview of its work on taxonomies and ESG disclosure, progress within member jurisdictions on channelling capital towards the Paris Agreement and other sustainability goals and related international developments.

New guidance on greenwashing from Swiss regulator

The Swiss financial services regulator, FINMA, has stated that it is strongly committed to implementing the NGFS's recommendations on integration of climate financial risk.

It has also published new guidance on preventing and combatting greenwashing. FINMA Guidance 05/2021 focuses on descriptions and labels for Swiss collective investment schemes as being green, sustainable or ESG, organisational requirements and conduct at point of sale of ESG products.

ECB pledge for further climate action

The ECB has published a pledge supporting the NGFS position and including a number of future actions, including:

  • Further integrating climate financial risk into its financial stability monitoring and prudential supervision.
  • Introducing climate disclosure requirements for ECB-eligible assets.
  • Develop climate change metrics and indicators to help bridge data gaps in physical risks, the carbon footprint of financial institutions’ portfolios and green financial instruments.

Author: Kelly Sporn