WSBI-ESBG position paper highlights need for green, social finance
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BRUSSELS, 7 March 2017 – In autumn 2016, WSBI-ESBG and its members developed a position paper on sustainable finance, highlighting the important role that savings and locally-focused retail banks can play in providing green financing opportunities and the interest this topic has generated among international and EU policy makers.
Behind climate challenges lies economic competition in the energy sector. Since 2009, the game changer is the decrease in the profitability of oil production versus the increase in profitability of sustainable energy which will lead to a low-carbon – and therefore greener – economy. The increase in renewable energies, including at micro-level (such as households), and in energy efficiency has led to a massification of the market which attracts investors. Banks are seen as pivotal in this evolution.
Climate change is a real concern around the world, and there are many ways that we can contribute to protecting our planet. By giving bank customers incentives to invest in energy efficient and green projects, households will play a vital role in decarbonisation.
Savings and retail banks are deeply rooted locally and benefit from the trust of their clients, holding a fiduciary responsibility. As a bank's role is to assess and analyse the risks in order to grant credits, its proximity to its clients, in particular households and SMEs, entail that local banks are best placed to accompany green development. The role of local banks should be promoted towards SMEs, in particular through the strengthening of refinancing and guarantee tools.
Locally-focused ESBG members are committed to promoting sustainable financing and urge G20 leaders to integrate retail and local banks within the international negotiation on aspects of financing, in particular due to their role in households and SME financing. WSBI-ESBG believes that local banks should be included in the international negotiations on sustainable finance; a dedicated task force or at least a specific session should be dedicated to them in order to benefit from their decades of expertise in this area.
Financial inclusion and financial education are two further initiatives in which Europe's savings banks are heavily involved. Savings banks have financially-inclusive business models, and provide low-cost services to everyone. Local banks also work within their regions, talking at schools and local events in order to give information on the kinds of products available and the importance of saving money for the future.
In the financial area, the investment strategy on for financial products did not consider local financing. International activities target investment banking and project infrastructure; they unfortunately forget about the local banks. ESBG calls for a bottom-up approach which focuses more on the energy market, where households and SMEs are key players. These customers can have a significant impact on the green economy and giving them access to credit is the daily business of local banks - financial markets being a useful complement, for instance, in the case of large SMEs.
>> Read the position paper