Discussing sustainable finance from a European perspective as the Commission's High-Level Expert Group on Sustainable Finance prepares its final report.
BRUSSELS, 8 December 2017 – On 6 December 2017, sustainable finance within the European Union was discussed during a Finance Watch conference in Brussels. Speakers and panelists discussed the importance of greening the economy and the difficulties being faced, in addition to what different Member States and private businesses are doing to ensure that ESG and sustainable factors are taken into account.
Olivier Guersent, Director General of DG FISMA opened the conference reminding the audience of the need to develop capital finance in the EU, which can be done by redirecting savings to long-term, sustainable uses. In order to reach the COP21 goals, the EU needs to mobilise finance and capital markets: “the EU needs to set out an overarching strategy on sustainable finance, focusing on shifting the bulk of investments from short-term to long-term markets. It can start by defining 'green' and 'sustainable' within an EU taxonomy", said Guersent. He pointed that the social and governance parts of the ESG factors are less developed; social factors being very much still dealt with at Member State level, not as an EU-wide issue.
Fighting climate change
From the European Investment Bank's perspective, Pierre-Emmanuel Noel underlined that the EIB is the largest multilateral provider of climate finance worldwide and commits 25% of its total funding to fighting climate change. He also pointed out that green bonds are key in making progress towards more green investment.
Indeed, Anthony Hobley, CEO of Carbon Tracker Initiative, said that the EU is currently in a carbon driven, low transition economy where clean energy is a strong competitor of coal. “Fixed carbon pricing will help to reduce market risk, he assured. Governments are fixing carbon prices as reduced usage of fossil fuels, meaning that less fossil fuel tax is being paid".
The future of finance
The Head of Financial Services Policy and International Affairs unit within DG FISMA, Felicia Stanescu, confirmed that the Commission has been working on an EU taxonomy for green finance and disclosure of capital requirements, but has not yet decided on a green supporting/brown penalising factor. She also said that “banks need to adequately assess their risks, by reviewing their risk assessments to ensure that they take carbon assets and ESG factors into account".
The Commission will give some deliverables during the One World Summit on 12 December in Paris and the HLEG report will be published end-January. The EC action plan shall be released in March 2018 with a conference.