The Institutional Investors Group on Climate Change (IIGCC) has identified policy-related barriers to achieving net zero created by the EU’s sustainable finance policy framework and outlined recommendations to address them.

In consultation with its investor members, the IIGCC set out recommendations relating to several EU policy areas, including Taxonomy, the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Sustainable Finance Disclosure Regulation (SFDR).

Its paper outlined the views of investor members on the policy barriers to, and opportunities for, net-zero alignment across the EU’s sustainable finance landscape.

Investors and wider market participants continue to face regulatory implementation challenges, the IIGCC warned, which was creating barriers to scaling capital flows that support the decarbonisation of the economy.

The IIGCC is aiming for the paper to contribute to the debate as the EU institutions build out their priorities for delivering on their 2030 climate goals.

“Sustainable finance regulation in the EU is at an important crossroads,” said IIGCC CEO, Stephanie Pfeifer.

“In 2018, the EU’s High-Level Expert Group published its landmark report, which threw into stark relief the scale of investment needed to support the EU’s climate goals.

“Six years later, the commission has translated many of that report’s key recommendations into reality.”

Pfeifer described the pace and intensity of the legislative agenda as “unprecedented”, which had resulted in the building blocks of a sustainable finance regulatory framework being in place.

However, she stressed that what happens over the next six years was just as important, with the incoming EU mandate to span the period running up to the milestone of 2030.

The European Commission was urged to turn its focus from ambition to implementation.

“We have long advocated for the role policy must play in creating an enabling environment for scaling financial flows in line with climate goals and decarbonising the real economy,” Pfeifer stated.

“This is an opportune moment to build on the significant progress made and to ensure that the EU’s suite of regulations provide a basis for channelling capital in line with net zero.”

---