European Union allowance
Is set out in the EU ETS, where one EUA corresponds to the right to emit 1 tonne of carbon dioxide equivalent under a specific period.
EU Emissions Trading System
The European Union “cap and trade” compliance carbon market, details on which are provided by the European Commission here.
European Sustainable Investment Forum
Eurosif is a pan-European partnership of Europe-based national Sustainable Investment Fora promoting Sustainable Finance at the European level (EU, EEA and UK)
Regulation EU 2019/2089. The Regulation amends the 2016 EU Benchmark Regulation and provides for two types of sustainable benchmarks – the climate transition benchmark and the EU Paris-aligned benchmark. Minimum standards for both are prescribed in a Level 2 Regulation – Commission Delegated Regulation EU 2020/1818.
Names of investment funds
ESMA Guidelines apply to EU investment funds which use ESG or sustainability-related terms.
Regulation (EU) 2023/2631 on European Green Bonds and optional disclosures for bons marketed as environmentally sustainable and for sustainability-linked bonds, lays down uniform requirements for issuers of bonds that wish to use the designation “European green bond” or “EuGB” for their environmentally sustainable bonds.
EIOPA European Insurance and Occupational Pensions Authority
– EIOPA workplan – sustainable finance activities
European Supervisory Authorities, namely;
• EBA European Banking Authority - EBA Roadmap on sustainable finance • ESMA European Securities and Markets Authority • EIOPA European Insurance and Occupational Pensions Authority
ESMA Roadmap on sustainable finance
also see
Directorate-General FISMA (DG FISMA) develops and carries out the Commission’s policies on financial services including sustainable finance.
European Sustainability Reporting Standards
European Single Access Point. A proposed Regulation creates an EU-wide mechanism offering easily accessible and digitally usable information based on companies’ public reporting requirements.
Compliance Carbon Markets also known as Emissions Trading Systems (ETS) IOSCO issued this final report in July 2023 setting out a series of recommendations to promote integrity and orderly functioning of primary and secondary CCM markets. IOSCO identifies these under two broad categories of compliance carbon markets – “cap and trade” and “baseline and credit system”. The report also includes a useful set of definitions on carbon market related terms including carbon credits.
An industry entity (FinDatEX) developed template designed to facilitate the necessary exchange of data between product manufacturer and distributor for the purpose of fulfilling ESG-related regulatory requirements of the SFDR and TR and delegated Acts under MiFID II and IDD.
The European Union’s growth strategy to transition the EU economy to a sustainable economic model with an objective to become climate neutral by 2050. The European Climate Law – EU Regulation 2021/1119 set out the framework for achieving climate neutrality.
The European Commission defines Sustainable Finance as the process of taking environmental, social and governance (ESG) considerations into account when making investment decisions in the financial sector, leading to more long-term investments in sustainable economic activities and projects.
ESG – Environmental
Environmental factors include contributions entities make to climate change through greenhouse gas emissions, along with waste management and energy efficiency. In EU law, the SFDR sets out that a sustainable investment includes an investment in an economic activity that contributes to an environmental objective, as measured, for example, by key resource efficiency indicators on the use of energy, renewable energy, raw materials, water and land, on the production of waste, and greenhouse gas emissions, or on its impact on biodiversity and the circular economy.
ESG – Social
The social criterion examines the impact of an entity’s operations on the labour and human rights of its employees including diversity and inclusion, workplace conditions and pay parity and equity; also its, social responsibility. In EU law a sustainable investment includes “an investment in an economic activity that contributes to a social objective, in particular an investment that contributes to tackling inequality or that fosters social cohesion, social integration and labour relations, or an investment in human capital or economically or socially disadvantaged communities.
ESG – Governance
The governance criterion refers to the governance factors of decision-making. In EU law, a sustainable investment must not do significant harm to environmental or social objectives and the investee companies must follow good governance practices, in particular with respect to sound management structures, employee relations, remuneration of staff and tax compliance.
This definition of sustainable investment is to be found in the SFDR Level 2 (annexes):
• Sustainable Investment means an investment in an economic activity that contributes to an environmental or social objective, provided that the investment does not significantly harm any environmental or social objective and that the investee companies follow good governance practices.
A key objective of the European Commission’s action plan on financing sustainable growth is to reorient capital flows towards sustainable investment and ensure market transparency. To achieve this objective, the Commission called for the creation of an EU classification system for sustainable activities - an EU Taxonomy.
An association of financial institutions who apply the Equator Principles. The principles are intended to serve as a common baseline and risk management framework to identify, assess and manage environmental and social risks when financing large industrial and infrastructure projects.
The broad spectrum of data products that are marketed as providing either a specific E, S or G focus or a holistic ESG focus on an entity, financial instrument, product or company’s ESG profile or characteristics or exposure to ESG, climatic or environmental risks or impact on society and the environment, whether or not they are explicitly labelled as “ESG data products”. (As defined by IOSCO.)
The European Commission have proposed a Regulation to apply to transparency and operations of ESG rating providers.
ESG Ratings The broad spectrum of ratings products that are marketed as providing an opinion regarding an entity, a financial instrument, a product, or a company’s ESG profile or characteristics or exposure to ESG, climatic or environmental risks or impact on society and the environment, that are issued using a defined ranking system of rating categories, whether or not these are explicitly labelled as “ESG ratings”. (As defined by IOSCO.)
ESG Ratings and data product providers . Entities who measure an entity/financial instrument/ product’s exposure to long-term ESG risks, providing an ESG score as an evaluation of the company’s performance against various ESG metrics.
European Financial Reporting Advisory Group. A private association established with the encouragement of the European Commission. EFRAG were charged with developing EU sustainability reporting standards (ESRS) under the CSRD.
European Parliament committee on the environment, public health and food safety.