In the legal magazine The European Union Law (“La Ley Unión Europea”), No. 77, last January 2020, (Ed. Wolters Kluwer) I published the study “Financial sustainability in the European Union. The Regulation (EU) 2019/2088 on sustainable finances”.
The study begins by pointing out the new vectors of the future development of the financial market regulation, which are sustainability and digitalization, to specify, then, the connecting point between sustainability and the financial system. Then, it examines Regulation (EU) 2019/2088 on sustainable finance to continue with the analysis of the relation between the European Green Pact and sustainable finance. In the second part of the study, the regulation of financial sustainability in the current Spanish law and the work of the CNMV in favor of the promotion of sustainable finance are exposed.
The following conclusions are presented in the study:
1ª. The new financial market ecosystem is determined by two vectors that are digitalization and sustainability.
2ª. Financial sustainability consists of making exclusively economic profitability compatible with a more all-embracing and humanly sustainable profitability
3ª. For this, investment decisions must take into account, in addition to the three classic factors of profitability, risk and liquidity, the two typical objectives of sustainability that are the social objective and the environmental objective.
4ª. The new regulation of financial sustainability regulation uses the model of adhesive regulation, because it is based on voluntary acceptance of the legal mandates of transparency by societies; and persuasive regulation, because, through the “comply or explain” method, it aims to create positive incentives that, in a competitive scenario, lead societies to apply sustainability policies
5ª. Regulation (EU) 2019/2088 on sustainable finance establishes harmonized rules on the duties of transparency that financial market participants and financial advisors have to fulfill in relation to the integration of sustainability risks both with respect to the entities themselves and to the financial products that they design and distribute.
6ª. The new Spanish regulation on financial sustainability comes from Law 11/2018 that seeks transparency, in terms of non-financial information and diversity through two basic documents that are the state of non-financial information integrated in the management report and the annual report of corporate governance that public listed companies must publish
7ª. Together with the regulation work indicated, the effective implementation of financial sustainability requires a promotion by the supervisory authorities of the financial markets and, to this point, the work of the CNMV as promoter is worth mentioning.