06 December 2022

ESMA's Ross: The Green Deal vs. Geopolitics

Tackling the environmental crisis and dealing with geopolitical challenges require two things - commitment to the long term and perseverance in our efforts to find international solutions.

I would like to thank the Deutsche Schutzvereinigung für Wertpapierbesitz e.V. (DSW) and Better Finance for inviting me to speak today. As highlighted by the title of the conference, the current geopolitical context creates new challenges to the EU sustainability and sustainable finance agendas. However, in the face of the Russian invasion of Ukraine and of the resulting energy crisis, we should not waver in our commitment to the EU sustainability agenda. Tackling the environmental crisis and dealing with geopolitical challenges require two things - commitment to the long term and perseverance in our efforts to find international solutions. As Winston Churchill said: “Success is not final, failure is not fatal: it is the courage to continue that counts.”

What can be the role of finance, or more precisely sustainable finance in these endeavours? While climate, energy and environmental policies and EU efforts for a Just Transition must continue to do the heavy lifting, the financial system must play its part. For the financial system to be able to facilitate our delivery of long-term sustainability objectives, the sustainable finance regulatory framework must be effectively and consistently developed and supervised. For the necessary capital flows to be channelled effectively towards sustainability objectives, investors must be able to make informed investment decisions in terms of sustainability.

Today, I would like to stress how transparency and comprehensibility of ESG disclosures, together with their effective supervision are key to protect investors. I will also stress how new obligations, under the forthcoming Corporate Sustainability Due Diligence Directive (CSDDD), may provide new levers for shareholders engagement. I will finally speak about the importance of international interoperability of corporate reporting standards to support a clear, comprehensive and decision-useful disclosure regime on ESG.
Before I dive into these topics, please let me highlight that our new ESMA Strategy 2023-2028 was published recently with Sustainable Finance being one of the 5 key areas that will fundamentally drive our work in the next 5 years. And, as reflected in the new strategy, given the novelty of this area and the urgency of the sustainability agenda, the development of a workable regulatory framework on one side, and effective and consistent supervision on the other, will have to progress in parallel, consistently and effectively...

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