Association for Financial Markets in Europe (AFME)

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London, United Kingdom
Official Web Site:

Despite communicating top-line support for sustainable finance policy in Europe, the Association for Financial Markets in Europe (AFME) has generally engaged against decisive regulatory intervention in this area. In a consultation response to the European Commission in 2020, AFME warned against policy actions that would penalize investments/ lending to high emitting sectors. AFME has stated support for the role of the finance industry in meeting EU climate goals and has commented on the need for financial markets to be "geared towards sustainability" but has stopped short of articulating the need for systemic reforms to the financial sector.

While consistently communicating support for a sustainable finance taxonomy on its website, AFME engaged in-depth with EU policymakers in favour of a watered-down version of the policy. For example, in a statement on the European Parliament negotiations in March 2019 they opposed expansion to cover environmentally harmful activities or the application of the taxonomy beyond products marketed as sustainable. In feedback to the Technical Expert Group (TEG) in September 2019, AFME supported the weakening of energy generation thresholds which would allow unabated natural gas to be defined as 'green' under the taxonomy. In feedback to the Commission on the Renewed Sustainable Finance Strategy in 2020, AFME again opposed the development of a taxonomy of environmentally harmful activities.

In 2018, AFME argued for weaker requirements for the EU's climate benchmarks in response to a European Commission consultation, including suggesting consideration of scope 3 emissions should be optional and supporting flexibility in choice of exclusion criteria. AFME reiterated many of these points in a 2019 consultation response, as well as supporting weaker requirements on ESG disclosure for all benchmarks. In a Commission consultation in 2020, AFME stated broad support for the EU Green Bond Standard whilst cautioning against alignment with “a very restrictive taxonomy” and not supporting the Commission’s suggestion to create a social bond standard. In 2019, AFME suggested that the EU consider creating standards for green securitisation and published a paper setting out how this might work.

In response to the ESA’s SFDR consultation on investor ESG disclosure in 2020, AFME argued for a less prescriptive approach, including a reduced number of mandatory indicators.

AFME’s position on Non-Financial Reporting has evolved in recent years. Despite stating support for improved, TCFD-aligned corporate ESG disclosure, AFME has suggested that this disclosure should remain voluntary. In feedback to the TEG in 2019, AFME further argued against requiring companies to disclose on the ESG impacts of their business, suggesting that disclosure should be limited to ESG risks to their business. However, in feedback to the European Commission on the review of the Non-Financial Reporting Directive (NFRD) in 2020, AFME was supportive of mandatory ESG reporting requirements, including on ESG impacts, as well as the expansion of the scope of the NFRD to cover large unlisted companies and a simplified framework for SMEs. In 2021, AFME stated further support for the Corporate Sustainability Reporting Directive (CSRD) in a press release.

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