Sustainability Disclosure in the EU Financial Sector

The aim of the chapter is twofold. On the one hand, it explores the main features of the Sustainable Finance Disclosure Regulation. On the other hand, it tries to assess whether the Sustainable Finance Disclosure Regulation is likely to succeed in harmonising sustainability-related (i) disclosure rules and (ii) fiduciary duties, not only across Member States, but also across financial products and distribution channels. The author concludes that before we reach a sufficient degree of harmonisation of sustainability-related disclosure rules and fiduciary duties, there is still a long way to go. And even if we reach the required degree of harmonisation in the EU, it is not given that this will necessarily lead to a more sustainable world. As may be gleaned from the European Green Deal and the Sustainable Finance Action Plan, the EU is aiming high when it comes to sustainability. But the EU is not an island. The author argues that there are roughly two opposite scenarios. In a pessimistic scenario, the more lenient or even non-existent sustainability agenda of other geopolitical powers gives them a competitive edge that is detrimental to the EU. In a positive scenario, the EU becomes a global standard-setter in the area of sustainability. Large global institutional investors such as Blackrock and State Street in any event say they are strong supporters of the sustainability agenda. Also, the re-entry of the United States of America in the Paris Climate Agreement under the Biden Administration may give us some hope.