The European Commission yesterday hosted a high-level conference on sustainable finance, building on the conference opened last year by President Macron and President Jean-Claude Juncker. Opening this year's conference, Vice-President Dombrovskis and Olivier Guersant, DG Financial Stability, Financial Services and CMU, European Commission, highlighted that the European Union accounts for 11 per cent of emissions - and should hold itself up to being responsible for not only reducing these, but also helping other countries to reduce their emissions.

This will require public monies, including from development agencies, but it also requires financial market development as private capital is essential to scaling up green investments - sustainable finance can be transformational if governments and others join forces. Keeping to the Paris Agreement 2°c climate change target needs massive investment if it is to be achieved.

The Commission has put together a full legal programme, two years from having first appointed its technical expert group. This includes a taxonomy which will be expanded to include social and governance aspects. The Technical Expert Group on Sustainable Finance (TEG) will publish its next package of measures in June, including the basis of common standards for green bonds; the Commission will add to these new requirements for non-financial reporting, including Task Force on Climate-related Financial Disclosures (TCFD) disclosures. 

In a video presentation at the conference, Michael Bloomberg, TCFD Chair, defined TCFD disclosures as giving investors information about the consequences of inaction. In a further video presentation, Jun Ma, chairman of the China Green Finance Committee, reminded us that this was a global effort, referencing the completed China green lending taxonomy and other initiatives being pursued by the China Central Bank and securities market authorities. 

The global perspective was reinforced by panel presentations being made by ministers and senior officials from Europe, three further continents and multi-national agencies. A common theme was that environmental considerations should be seen as core to company activity and supported by regulation. Satishi Ikeda, Chief Sustainable Finance Officer, Japan Financial Services Authority, explained that sustainability should be seen as a driver of economic growth and outlined corporate governance changes involving enhanced stakeholder engagement that sounded very similar to changes taking place in the UK. Global ?cooperation? was seen as still being at a formative stage - with the central bank network and TCFD called out as being more advanced. 

Over the day we heard that climate is seen as more pressing than other sustainability objectives; meeting Paris objectives should be viewed as being a forerunner to broader SDG goals - water, biodiversity, human rights and so on (noting these are also a source of financial risk).

A question was also asked around the steps needed in order to be able to invest on the basis of SDG principles. 

From an investor perspective, Nathan Fabian, Chief Responsible Investment Officer, UNPRI, explained the relevance and importance of the taxonomy in helping investors make informed decisions. In terms of broader definition, we need to think in terms of making a significant contribution to the low-carbon economy while not causing significant harm when viewed through other environmental and social lenses. 

Speaking for the Government Pension Investment Fund, Hiro Mizuno, Executive Managing Director and Chief investment Officer, explained that they were changing the timeframe of their mandates from one to five years to send out the signal that they did not expect asset managers to seek short-term gain at long-term risk. 

Examples can also be found as to the contribution that fintech can make, not least in delivering cleaner (and safer) energy alternatives to households in developing countries. Digitisation can be a catalyst for making household choices more sustainable but requires investment, a liberal mindset on the part of regulators, and a measure of market disruption. 

The role of central banks in driving forward the agenda was underlined by the closing speech given by Mark Carney, Governor, Bank of England. As the governor observes, the building blocks for a transition to a low-carbon economy are being put in place. Markets are beginning to understand the costs of climate risks, but further progress is dependent upon the coherence and credibility of government policies on climate change: ?As countries build their track records and their credibility grows, the market will allocate capital to deliver the necessary innovation and growth and pull forward the adjustment to a low carbon future.?