Finance is Critical for Achieving Sustainable Development

Without the necessary cash, no matter how ambitious, thorough, and promising the goals mentioned in an ideal business plan are, they will remain on paper and in the concept stage in the end.

That is why, in order to accomplish its Sustainable Development goals, the European Union places a strong emphasis on promoting Sustainable Finance as a first step.

Since 2016, the EU has been looking into ways to realistically incorporate sustainable development challenges into financial policy for capital flows into sustainable activities in order to achieve a sustainable development Action Plan that has been adopted by Member States.

Since 2018, the EU has had a particular targeted Action Plan on Sustainable Finance with specific legal and financial parameters.

The goal is for Member States to follow through on their pledge to channel private funds into investments that support the Paris Agreement 2016, with an initial goal of carbon neutrality by 2050 and the UN’s 17 Sustainable Development Goals (SDGs) being met at the same time.

It is commonly acknowledged that the well-known Green Deal (Global Green Deal/UN) will only be implemented with specific initiatives.

This historic agreement paves the way for a modern, resource-efficient, and competitive economy.

Through the European Green Deal, the EU has pledged that 1/3 of the Next Generation, i.e. the EU’s €1.8 trillion recovery package, will go toward implementing the Green Deal.

The EU’s primary goal is to secure sufficient private-sector funding to accelerate progress toward a climate-neutral and energy-efficient environment in terms of natural resources, as well as a fair distribution of economic advantages.

As a result, the European Commission issued an updated strategy for financing the transition to a sustainable economy on July 6, 2021.

It is a never-ending process to achieve a Circular Economy.

With all of this in mind, the growing number of investors that consider environmental, social, and governance (ESG) concerns when making financial sector investment decisions is a natural organic development.

Long-term Investment Vehicles and Funds that invest in sustainable economic activities and projects are continually being developed, and this is not by mistake.

With the EU putting such a strong emphasis on Sustainable Development issues and investors who appear to be responding positively at first, it is clear that equal attention is now being paid to the implementation of the necessary EU Regulations and Directives that are being developed to regulate interrelated Sustainable Development and Corporate Social Responsibility issues.

The EU Taxonomy Regulation, the Sustainable Finance Disclosure Regulation (SFDR), and the Benchmark Regulation (BMR) are the foundation for increasing transparency and providing investors with the tools they need to examine and identify sustainable investment opportunities, as well as obtain a comprehensive view of Investment Fund Managers, Financial, and Investment Organizations.

The fact that the Regulations cover the organizations supervised by all (three) European Supervisory Authorities in financial services, namely the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA), and the European Insurance and Occupational Pensions Authority (EIOPA), as appropriate, demonstrates that it is a pan-European Plan.

It’s no coincidence that Mairéad McGuinness, the European Commissioner for Financial Stability, Financial Services, and the Capital Markets Union, recently stated: “Sustainability is high on the EU agenda for financial services…the recovery must be green,” and that significant private investment in sustainable activities is needed.

With Cyprus on the receiving end of hundreds of millions of euros from the EU, which approved the country’s Recovery and Resilience Plan on July 26, we can be confident that the implementation of Sustainable Finance and Development guidelines will be anything but a fireworks display.

They are also not going to leave unscathed the Cypriot firms and businesses that are supervised, indirectly, by the authorities listed above in collaboration with the Cypriot authorities.

Finally, Sustainable Finance has already begun to reshape banking and broader financial services, as well as how we will all do business in the future.

It is more important than ever to think about wise strategic decisions that lead to long-term business solutions.

If we, as businesses and citizens, are unwilling or unable to take action toward achieving real, long-term development projects, and instead rely on temporary, unsustainable situations or “solutions,” the attempt to attract new direct and long-term investments will fail, and we may even lose significant EU funds.

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