Financial institutions continue to face a complex, continually evolving regulatory framework on sustainable finance and managing ESG risks. In light of the rapid rate of change and regulation increasingly taking effect, AFME is pleased to renew our partnership with Linklaters and publish an update to our report “Sustainable Finance in Europe: Regulatory State of Play” which was first published in 2021 and last updated in March 2023.

This report reviews the latest developments and their impact on banks and capital markets, providing a practical guide to the wide range of initiatives in the EU, UK and Switzerland. As of December 2024, the key building blocks of EU sustainable finance legislation are in place, including the EU Taxonomy, Corporate Sustainability Reporting Directive (CSRD), EU Banking Package, the Corporate Sustainability Due Diligence Directive (CS3D) and the Sustainable Finance Disclosure Regulation (SFDR). Banks are focusing on implementation and are preparing their first year’s reporting under the CSRD’s European Sustainability Reporting Standards (ESRS), having published their first EU Taxonomy alignment reporting in 2024.

In the UK, 2024 marked a resurgence of ambition in sustainable finance regulation with a new government announcing a new sustainable finance package, the FCA’s Sustainability Disclosure Requirements (SDR) regime and anti-greenwashing rule taking effect, and announcements regarding the adoption of ISSB standards, the development of a UK Green Taxonomy, legislation regulating ESG ratings providers and the findings of the Transition Finance Market Review.

AFME continues to support members as they navigate the continually evolving regulatory framework, led through our Sustainable Finance Steering Committee and dedicated working groups. We also highlight the experiences of our members through our policy engagement and consultation submissions. Our annual European Sustainable Finance conference brings together the financial services community with policymakers to evaluate the practical implementation of sustainable finance regulation across Europe and discuss what the future brings.