The EU High-Level Expert Group on Sustainable Finance (“HLEG”) published its final report with recommendations to create an EU financial system that supports sustainable investments. In 2016, the Commission tasked 20 representatives from banking, insurance, asset management, stock exchanges, financial industry associations, international institutions, and civil society to prepare a comprehensive blueprint for reforms along the entire investment chain. The recommendations are part of the EU’s work to build a Capital Markets Union (“CMU”) and will serve as the basis for a Commission's Action Plan on Sustainable Finance that is expected in March 2018.

The final report calls for the establishment of a European sustainable finance taxonomy to ensure consistency and clarity on what constitutes a sustainable and green investment. Also, policymakers are encouraged to strengthen the environmental social and governance (“ESG”) considerations in the fiduciary dutyof investors. Under the recommendations, the roles and capabilities of the European Supervisory Authorities (“ESAs”) should be broadened to promote sustainable finance as part of their mandates. The experts further proposed to develop official standards for green bonds and to establish a “Sustainable Infrastructure Europe” facility to expand the size and quality of the EU pipeline of sustainable assets. Finally, the report also calls for strengthened climate change risk reporting requirements.

Some of the final report's recommendations are already underway, as they were presented in the HLEG interim report of 13 July 2017. Moreover, the Commission has announced its intentions to undertake a regulatory fitness check of public reporting by companies, which will also incorporate emerging calls to broaden non-financial reporting with insights on companies' ESG impact.

European Parliament sets up a new special committee to look into tax evasion practices The Parliament intends to establish a new special Committee on financial crimes, tax evasion and tax avoidance. The Committee, also referred to as “TAXE 3”, is expected to be formally endorsed by the Parliament’s plenary on 1 March. Its draft mandate was already agreed by the Parliament’s Conference of Presidents on 8 February and foresees a 12 months-long investigation into harmful tax practices within the EU as well as third countries, with a particular focus on the UK’s Crown Dependencies and Overseas Territories.

45 Members of the Parliament (“MEPs”) will be monitoring the implementation of the recommendations delivered by the former special and inquiry committees TAXE 1, TAXE 2, and PANA, set up in response to Luxemburg leaks and Panama papers scandals. The Paradise Papers were published shortly before the PANA Committee issued its final recommendations, which resulted in calls by some MEPs to continue their work and even to establish a permanent investigative committee.

TAXE 3 will be responsible for the assessment of the listing process and the impact of the EU’s blacklist of non-cooperative jurisdictions in tax matters. The mandate grants the Committee the power to access relevant documents for its work and to hold hearings, while specifically referring to the Code of Conduct Group for business taxation, considered to be the most secretive Working Group of the Council. Furthermore, the Committee will conduct an analysis of VAT fraud and look into evasion practices in digital taxation. For the first time, the Parliament will also investigate national schemes providing tax privileges for new residents or foreign income. The assessment of the Commission’s process of listing high-risk third countries in the area of money laundering and the evaluation of the consequences of bilateral tax treaties also figure among the Committee’s competence.