Finances

7 key themes from the AFME’s 4th annual European Sustainable Finance Conference

30 May 2025

Advancing sustainable finance requires close collaboration. That is why we are proud to have sponsored the Association for Financial Markets in Europe (AFME) European Sustainable Finance Conference for the 4th consecutive year. 

The conference provided an ideal platform for discussions. We see focus remaining on creating actionable insights that drive meaningful outcomes in sustainability efforts across sectors. Transition remains the central topic amongst market participants and collaboration between public and private entities will be key to overcoming barriers, unlocking capital, and ensuring effective implementation of sustainability initiatives. Below, we summarise our main takeaways as the market continues to evolve:

Stronger carbon pricing regulation seen as key to accelerate transition finance

44% of surveyed AFME conference participants* flagged stronger carbon pricing and emissions regulation as the most effective policy tool to accelerate transition finance. With regards to transition plans, only 20% believe making these mandatory will be effective, likely reflecting sufficient stakeholder pressure that corporates are facing in this area. In particular, companies are increasingly taking a strategic mindset - focusing on material risks and sector-specific pathways in their plans, aligning their strategies with clear, actionable transition goals.

Investor scrutiny of climate metrics continue with increased focus on impact

European investors continue to develop their climate strategy, notwithstanding the geopolitical “noise” in this area. Investor behaviours are evolving beyond superficial compliance checks; there is a growing focus on the substance behind transition plans, including cost assumptions and technological dependencies. This shift signals a maturation in the investment landscape, where transparency and accountability are paramount.

Emerging themes of Nature and Resilience

The integration of nature-related considerations and resilience into financial discussions is gaining momentum. In discussions on the labelled debt market, it became apparent that “green bonds” are becoming more holistic in their application – with recent issuers considering adaptation/resilience as well as biodiversity co-benefits.

Despite call for simplification, broad-based support for EU taxonomy remains

67% of conference participants* called the EU Taxonomy “moderately” or “very” effective in supporting strategy and capital allocation. However, it became apparent from discussions that many support the drive towards simplification of both this regulation and the wider sustainability regulatory framework across Europe (Omnibus proposals) as a way of retaining credibility and prioritisation in sustainability efforts.

Sustainability reporting challenges remain, necessitating a drive for interoperability

The range and complexity of sustainability reporting regimes is affecting corporates, with 66% of those in the survey* flagging either lack of resources or difficulties in data collection and reporting.

Discussions highlighted the importance of aligning standards, (such as ESRS, ISSB, and GRI), to reduce complexity and ensure that simplification does not compromise the quality of disclosures. Investors and corporates alike expressed a strong preference for interoperability in reporting mechanisms to facilitate access and reduce burdens.

Climate risk management and opportunities are two sides of the same coin for banks

Embedding ESG risks into banks' core risk management frameworks is now seen as paramount, as a result of regulatory and stakeholder needs. The complexities of data collection, particularly for Scope 3 emissions, pose challenges, especially for non-listed companies. However, by framing these challenges as opportunities for innovation and strategic alignment, banks can unlock greater value from their sustainability efforts, aligning financial performance with long-term environmental goals.

Voluntary Carbon Markets (VCM) continue to mature, albeit challenges remain

The VCM is maturing gradually. The panel identified several barriers to scaling VCM, including a lack of standardisation and regulatory clarity. Ensuring the integrity of carbon credits remains a critical point, as high-quality standards are necessary to build trust among investors. As the market continues to evolve, a concerted effort towards integrating voluntary and compliance markets is expected to stimulate demand and enhance market credibility. The discussion highlighted that while the market landscape is fraught with challenges, the progress made thus far shows a clear pathway to more cohesive and effective carbon trading systems.

If you would like to discuss any of the topics raised at the AFME conference, please contact a member of our team.

* NatWest survey conducted at the AFME conference; based on 27 responses received.

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