The European Commission has released an Action Plan on Sustainable Finance, meant to formalise the European Union’s ambition. This is the executive body’s official response to the Final Report of the High Level Expert Group on Sustainable Finance, which has sought to operationalise the ambitions of the Paris Agreement and the Sustainable Development Goals into a concrete legislative roadmap.

ShareAction warmly welcomes the Commission’s ambitious agenda, which is testament to the fact that the European Union is committed to re-engineering its financial system in order to channel the flow of private capital towards sustainable investments. In particular, we applaud the Commission’s decisiveness in announcing its intention to legally clarify the duties of institutional investors and asset managers in relation to sustainability, as well as to ensure greater transparency towards end investors.

ShareAction also welcomes the increasing focus on the social dimension of sustainable finance. Initiatives such as the intention to create a sustainable taxonomy, instead of a green taxonomy, show that the Commission has been receptive to the feedback of stakeholders, including ShareAction, who have called for a rights-based approach to sustainable finance. Nonetheless, we are concerned that the Commission’s approach of starting with “climate first” in its development of the taxonomy creates an illusion that human rights considerations are somehow disconnected from climate risk mitigation and the achievement of wider environmental goals. This is particularly the kind of siloed thinking that the Commission should be seeking to discourage if financial markets are to truly contribute to the creation of fair, resilient and inclusive societies.

Bethan Livesey, Head of Policy at ShareAction, says: “ShareAction’s work over the past 10 years has centered around the conviction that a truly resilient and fair economic system is predicated on a financial system that is accountable to ordinary savers. While not a silver bullet, we share the Commission’s ambition that legal clarification that ESG factors form part of investors’ duties is a key lever which can aid a shift towards long-termism.

“It is now up to the Commission to ensure that a legislative proposal on the matter will give clear guidance to investors on how to go about discharging these duties: it is not simply a matter of constructing sustainable portfolios. Embedding sustainability and accountability in investors’ duties requires new approaches to understanding and defining risk, interacting with beneficiaries, disclosure, and design of stewardship strategies. It involves nothing short of imprinting this thinking in the DNA of all investment functions. In particular, the Commission should seek to specify that considering non-financial interests of clients and beneficiaries, including ethical considerations, does not constitute a breach of fiduciary duty”.

Eleni Choidas, Senior EU Affairs Officer at ShareAction, added: “Laudable work has been achieved in embedding sustainability in EU financial regulation, notably through the IORPS II directive. Especially when considering the long-term liabilities of pension fund beneficiaries, this was a significant win. Nonetheless, the HLEG has correctly identified that stronger clarification is needed in order to ensure that pension funds and other investors, as well as their managers and delegates, operate on a level-playing field. We need to ensure that regulation creates the correct incentives for investors to properly embed sustainability in their duties, including through amending prudential, reporting and accounting frameworks, as well as by allowing end-investors means to hold their trustees and providers to account on how their money is invested”.

ShareAction, together with the Business and Human Rights Resource Centre, recently organised a roundtable at the European Parliament which focused precisely on the need to ensure human rights considerations are embedded across the Commission’s initiatives from the outset.


Notes to editors:

  • For more information, please contact Eleni Choidas at
  • At the One Planet Summit, held in Paris in December 2017, Vice-President Dombrovskis officially announced the Commission’s intention of putting forth a legislative proposal to clarify investors’ duties as those relate to sustainability.
  • This announcement came as a result of the work of the High Level Expert Group on Sustainable Finance, which included this proposal in its Interim Report of July 2017.
  • Following the release of the Final Report of the High Level Expert Group, which reaffirmed this intention, the Commission is now seeking to provide statutory clarification on the topic, centered around two considerations: the need to ensure ESG risks are systematically accounted for in investment decision-making, as well as the need for increased transparency towards end-investors.