The transition to a sustainable and fair economy entails substantial investments. Sustainable finance facilitates directing capital towards sustainable activities and projects. That means taking environmental, social and governance considerations into account when making investment decisions.
Green finance is a part of sustainable finance that takes into consideration environmental objectives such as whether the investments would preserve biodiversity and water and marine resources, prevent pollution, boost the circular economy, or support climate change mitigation and adaptation.
Sustainable finance is the broader concept that includes not only green investments but also social characteristics such as human rights, labour relations and investment in communities and governance-related issues, such as management structures, employee relations and executive remuneration.
Sustainable finance will help the EU achieve the objectives of the European Green Deal, as well as the EU’s international commitments regarding sustainability. The European Green Deal investment plan is to mobilize at least one trillion euros of investments over the decade. It will create the right environment — or ‘enabling framework’ — to facilitate and stimulate the public and private investments needed for the transition to a climate-neutral, green, and inclusive economy.