Sustainable Finance Action Plan

The Sustainable Finance Action Plan (SFAP) is a major EU policy initiative aimed at promoting sustainable investment across the 27-nations. Introduced by the European Commission in March 2018, the plan responds to the Paris Agreement and the UN’s 2030 Agenda for Sustainable Development, aligning with the European Green Deal’s goal of achieving carbon neutrality by 2050. 

The SFAP has three main objectives:

1. Reorient capital flows towards sustainable investments and away from sectors like fossil fuels that contribute to global warming.
2. Manage financial risks related to climate change, resource depletion, and environmental degradation.
3. Enhance transparency and long-termism in financial and economic activities to support sustainable and inclusive growth.

Implemented in phases starting March 2021, the plan aims to integrate environmental, social, and governance (ESG) factors into financial practices and drive the transition to a more sustainable economy.