Opportunities and challenges for sustainable finance in the european banking industry

Over the last decade, the European Union and the European Banking Supervisory Authorities have carried out relevant initiatives to develop sustainable finance aimed at facilitating the transition towards a more sustainable and climate-neutral economy aligned with the objectives of the 2030 Agenda and Paris Agreement. In spite of these efforts, there are still significant regulatory, supervisory and operational questions to deal with. This article, based on the most relevant initiatives, analyses the major operational challenges, which are related to the long-term shareholders and investors engagement, the difficulties to adopt the recently approved European taxonomy, the quality and availability of ESG information for investing in green and sustainable activities, the green and social washing, the ESG risks integration and analysis, and the development of sustainable finance and retail investment products. The conclusions would be useful for managers, regulators and researchers whose aims include taking actions and enabling the effective implementation of initiatives and regulations on sustainable finance.