Let me start by congratulating all women on this important occasion - the International Women's Day. Today we celebrate women and their many achievements. But it is also an important day to continue to pursue the empowerment of women in Europe and around the world.
I am proud and happy to be working alongside so many talented women in the EU institutions. But we must continue pushing to increase women's participation and leadership in politics, and sectors such as economics and finance.
Today the European Commission is presenting two action plans for the future of our financial sector. One on sustainable finance, to steer the financial sector to help reach Europe's climate change goals. And one on financial technology – or Fintech – to make sure innovative financial companies can access capital, scale up in Europe and compete globally. The world is changing, and finance must change with it.
These two Action Plans are an important part of our work to complete the Capital Markets Union. Deeper and more integrated capital markets will benefit all Member States, by helping our companies access diverse sources of financing. And they are important for the resilience of the Economic and Monetary Union, since they increase private-risk sharing and improve the shock-absorption of the economy.
On Monday, the Commission will present three additional proposals to complete the Capital Markets Union. Now the European Parliament and Member States should accelerate work on pending CMU proposals, so we can get this important project past the finish line before the next European elections.
Let me now start by turning to the Sustainable Finance Action Plan. There is no doubt that the financial sector must contribute more to the fight against environmental problems, and especially climate change. Over the next decade, we will need around €180 billion a year in additional low-carbon investments to meet our Paris commitments.
So we urgently need to put the financial sector at the service of our planet. Today we are presenting the first ever EU Action Plan on sustainable finance. It builds on the landmark report by the High-Level Expert Group on Sustainable Finance, chaired by Christian Thimann. And it sets out a complete strategy for directing more private investment into green projects, by changing incentives and culture across the entire investment-chain.
Let me mention a few of the key objectives:
First, we want to make it easier for investors to identify activities that are sustainable, by providing clear and trustworthy definitions. We will present a legislative proposal in May on the progressive development and governance of an EU classification system [or so called taxonomy] for green and sustainable activities. To put it simply, this will provide common EU definitions for what is green and what is not. The first taxonomy on climate-related activities should come into effect in fall of 2019.
Second, we want to improve access and information for retail investors. They are increasingly demanding sustainable and low-carbon investments, so we need to help them along. We will require financial advisors to ask clients about their sustainability preferences, and offer suitable investment products.
We will also propose EU-labels for green financial products, such as green bonds or green investment funds. Today, organic labels for food in the supermarket or eco-labels for clothing and housing help consumers identify sustainable options. In the same way, green labels for financial products would create a simple way for investors to locate and choose climate friendly investments. To make a long story short, we believe that "green is the new black".
And third, we want to change the culture in the financial industry. Climate change can result in financial losses, for example due to the increasing number of natural disasters. But it can also offer opportunities for new investments in the low-carbon economy, such as renewable energy, passive housing, or electric vehicles. To navigate this landscape, the financial industry needs less focus on short-term profit, and more awareness and transparency about sustainability risks:
In May, we will present a legislative proposal on so called ''fiduciary duty''. It will clarify the sustainability-related duties of institutional investors and asset managers. These investors play an influential role as intermediaries between end-investors and companies. Our proposal will ensure that they work closely and transparently with their clients to consider sustainability in asset allocation and risk-management.
We will also consider incorporating sustainability into prudential requirements. This could be done by adjusting capital requirements for banks to support green investments – which is also known as a green supporting factor. Any measures would have to be justified from a risk and financial stability perspective. So they will need to be carefully calibrated. Green does not necessarily mean risk-free. Along this, we are also looking into amending rules for banks' risk management policies to better account for sustainability –related risks.
These are just some parts of our Action Plan, which will be implemented in steps. We will first concentrate on environmental and climate risks, and expand to include broader social and governance issues over time.
Let me just mention that on 22nd March in Brussels, President Juncker and I will have the pleasure to host a High-Level Conference on Sustainable Finance. It will be an occasion for European leaders to debate how to effectively follow-up on our Action Plan.
Today we have also adopted an important Action Plan on Fintech. To compete globally, Europe's innovators need access to capital, space to experiment, and scale to grow. But we also need to address consumer safety, and maintain the resilience of our financial institutions to cyber-attacks.
One key action is our legislative proposal for an EU license for crowdfunding which we are presenting today. It would allow both lending and investment-based crowdfunding platforms to operate across the EU based on a single authorisation, and without complying with 28 different sets of requirements. This would help them to scale up. That way, they could offer more choice for investors, and more opportunities for entrepreneurs to attract funding across the EU.
The Action plan also looks at how to make sure that financial supervisors keep up with technological developments. We encourage EU countries to set up safe spaces, where companies can experiment with new technologies and business models. Early next year, we will report on best practices for regulatory sandboxes.
The Action Plan also aims to speed up the adoption of technologies with high potential for breakthroughs, such as blockchain. We will set up an Expert-Group to look into possible regulatory obstacles to financial innovation. But we should also keep a close eye on risks, such as those associated with cryptocurrencies. If necessary, the EU stands ready to act once these issues are discussed at the international level, namely in the G20.
With these two Action Plans, we are setting a clear direction for Europe's financial sector: to remain at the peak of global innovation and competition, without forgetting the interests of our planet.