Global Trustee and Fiduciary Services News and Views Issue 50

THE GLOBAL FRAMEWORK RANGES BETWEEN LEGISLATION AND SELF- REGULATION. Industry reactions to the Commission’s proposals Feedback has so far been mixed. There has been support for a progressive development of the sustainability taxonomy and support for better voluntary disclosures through existing industry-led FSB TCFD work. But as environmental risks are constantly and rapidly evolving — criteria and risks relevant today may not be so in the future. This is something that the Commission’s expert group will have to take into consideration. The ultimate cost involved for firms in introducing such proposals is still not clear, given that many of the detailed requirements will not be known until the delegated acts have been finalised. This could be simplified by reordering the proposal deadlines, for example putting the taxonomy solution first in terms of deadlines. Further work may also be recommended in the EU prior to any recalibration of prudential measures to ensure that capital frameworks can still achieve financial stability aims. Any future green supporting factor should look to provide a clear incentive for institutions to transition to a green economy, while recognising that capital requirements are there to mitigate risk and green investments could also contain risks that may then not be fully represented in capital requirements. The Commission is standing ready to provide the necessary support to identify the most prudentially sound way of implementing these sustainability proposals. As Larry Fink, chief executive of BlackRock, said in his annual letter on the companies that BlackRock invest in: “a sense of purpose is an understanding at every level of the company about its role in the world and in the community”. 37