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4.168. The ECB's [The European Central Bank] first climate stress test estimated potential losses of around EUR 70 billion to the banks included in the assessment, in case of a disorderly transition to a low-carbon economy. It stressed that this assessment likely understated actual climate-related risks due to a variety of factors. It also found that most banks do not yet sufficiently consider climate risks in credit risk assessment or stress tests. {219}
{219} ECB (2022), "Banks Must Sharpen Their Focus on Climate Risk, ECB Supervisory Stress Test Shows", 8 July. Viewed at: https://www.bankingsupervision.europa.eu/press/pr/date/2022/html/ssm.pr220708~565c38d18a.en.html.

4.179. Looking forward, two Commission proposals aim to strengthen the framework by (i) introducing more risk-sensitivity and proportionality, in particular the new category of low-risk profile undertakings, improving the approach to supervision (including for groups and cross-border), and including macro-prudential and climate-related tools [241] ; (...)
[241] European Commission Proposal COM(2021) 581. As spelled out in the Strategy for Financing the Transition to a Sustainable Economy, this proposal would require insurers to identify material exposure to climate change risks and assess potential business impacts and task EIOPA to assess the possibility to introduce a dedicated prudential treatment of such risks.

4.180. (...) A number of Regulations and Directives were amended in substance, in particular the Benchmark Regulation (regarding "third-country benchmarks", the supervision of critical benchmarks, and regarding climate-related benchmarks); (...)

4.183. To facilitate access to finance under the first objective of the CMU [Capital Markets Union] Action Plan, the Commission, for example, adopted a proposal for a European Single Access Point in November 2021 that would make all financial and sustainability-related information that companies are required to publish, as well as information on investment products, available to investors , (...)

4.190. The Commission considers that financial markets will have to contribute to achieving the objectives of the European Green Deal, requiring incorporating sustainability risks and impacts into their operations. The 2018 Sustainable Finance Action Plan spelled out key activities to reorient capital flows towards sustainable investments, manage financial risks related to environmental issues, and increase related transparency, with the Strategy for Financing the Transition to a Sustainable Economy building on and complementing it since July 2021. In 2020, the Commission published a Digital Finance Strategy for the EU until 2024, recognizing the role that digital finance can play in improving access to finance, supporting economic recovery, and mobilizing funding in support of the European Green Deal and Industrial Strategy.

4.191. In 2019 the Benchmark Regulation was amended to also include climate-related benchmarks (see above) and a Sustainable Finance Disclosure Regulation (SFDR), applying to both financial market participants and investment products, was approved in 2019 aiming to limit "greenwashing" of financial investments. Six additional Commission Delegated Acts (contained in the so-called April 2021 package) expanded requirements for financial firms that include assessing sustainability risks, or considering clients' sustainability preferences.

4.192. A key element of these efforts is the ability to define what economic activities and investments qualify as sustainable or contributing to a low-carbon transition, and can be used by companies and investment firms to determine the "greenness" of their operations or investments. The Taxonomy Regulation , which entered into force in 2020, defines six specific environmental objectives: (i) climate change mitigation; (ii) climate change adaptation; (iii) the sustainable use and protection of water and marine resources; (iv) the transition to a circular economy; (v) pollution prevention and control; and (vi) the protection and restoration of biodiversity and ecosystems. The Regulation sets out criteria for an activity to be classified as significantly contributing (and not significantly harming) these objectives, and also amended the SFDR. In 2021, it was complemented by Commission Delegated Regulations establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to two of the six objectives: climate change mitigation and climate change adaptation (applicable since early 2022) , and another one defining what and how to disclose. According to the Strategy for Financing the Transition to a Sustainable Economy, the Commission plans to develop another Taxonomy Delegated Act covering the remaining four environmental objectives.

4.193. In April 2022, the Council agreed to a Commission proposal to establish clear rules for environmentally sustainable bonds (green bonds) [274] , pending discussions with Parliament. The Commission also aims to clarify the operations of Environmental, Social and Governance (ESG) rating providers and transparency on the characteristics and methodology of ESG ratings, and is planning to propose legislation during 2023 based on an impact assessment. In June 2022, the European Parliament and Council agreed to a Commission proposal for a Corporate Sustainability Reporting Directive (CSRD) introducing obligations for companies to report on European Sustainability Reporting Standards.
[274] Proposal for a Regulation of the European Parliament and of the Council on European Green Bonds COM(2021) 391. The proposed regulation would see ESMA supervise external reviewers of green bonds.

4.198. (...) The proposed reforms of the EU Emission Trading System (ETS) in the context of the Fit-for-55 package (Section 4.4.1) would extend the system to maritime transport, increase the ambition of reduction targets for aviation, and introduce a self standing ETS for road transport. (...)

4.199. (...) Following a review of the TEN-T [Trans-European Transport Network] policy in 2019, the Commission proposed a revised TEN-T regulation in 2021 (amended in 2022) that, inter alia, reflects policy developments regarding emissions (the European Green Deal and the Climate Law) or sustainable mobility (Sustainable and Smart Mobility Strategy); includes measures related to interoperability, accessibility, urban nodes, and climate resilience; and puts additional emphasis on user services. According to the Commission, it is expected to be adopted towards the end of 2023. (...) In addition, the Global Gateway initiative aims to mobilize up to EUR 300 billion between 2021 and 2027 for investments in infrastructure projects, including transport, incorporating key objectives of EU cross cutting policies including those related to good governance and the environment. [288]
[288] European Commission Joint Communication JOIN(2021) 30. The Global Gateway initiative aims to build sustainable infrastructure in the priority areas of digital, climate and energy, transport, health, and education and research.