Sustainable Finance: An Overview of ESG in the Financial Markets

The author provides an overview of ESG in the financial markets. She sets out that sustainable finance has been around for years. After publication of the Sustainable Finance Action Plan by the European Commission in March 2018, sustainable finance rose to the top of the EU legislative agenda for the financial markets, as well as the regulatory and supervisory agenda of EU and national supervisors and competent authorities of the financial sector. The author provides an overview of various sustainable and ESG products that have been a feature of the international financial markets, such as green, ESG and sustainability-linked loans, bonds and derivatives. The author also discusses the current legal framework in which these financial products are issued, with a focus on EU-level legislation, including the non-financial disclosure requirements of the Corporate Sustainability Reporting Directive and the European Sustainability Reporting Standards, the Taxonomy Regulation, the Sustainable Finance Disclosure Regulation, the Benchmarks Regulation and other financial market legislation. The author also considers legal and regulatory developments on the horizon, such as the EU Corporate Sustainability Due Diligence Directive, the EU Green Bonds Regulation, the ESG Rating Regulation, sustainable securitisations, ecolabelling for retail financial products, as well as greenwashing and climate litigation. The author concludes with a few remarks on general trends in ESG and sustainable finance developments in the financial markets.