CAITLIN McERLANE | Partner, Financial Services Regulatory, Baker & McKenzie LLP

In March 2018, the European Commission published an ambitious Action Plan on Sustainable Finance, which proved to be the first step in a series of regulatory reforms aimed at fundamentally reorienting capital flows towards sustainable investment and managing perceived financial risks stemming from climate change. While the resulting reform framework is sprawling in nature, and adds to a disparate set of pre-existing regulations, the overall design forms a blueprint that will touch almost every aspect of the financial services industry and profoundly alter the language of sustainable investment.

In this article, we will examine the major features of the reform project and how the new regulatory architecture will impact financial institutions based in the E.U. and further afield, alongside the question of how the reforms will flow through to commercial companies.