“Greening finance for sustainable business” – Speech by Valdis Dombrovskis at the One Planet Summit in Paris
On 12 December 2017, Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, Financial Stability and Financial Services, gave a speech at the One Planet Summit in Paris.
In this speech, called “Greening finance for sustainable business”, he reiterated the commitment of the EU to reduce carbon emissions by 40% by 2030. To reach that target, the EU will need around 180 billion euro in additional yearly low-carbon investments. For that, private capital will also need to play its part. He mentioned indeed that assets managers and institutional investors manage about 35 trillion euros in Europe. But for private investors to fund the transition to the low-carbon economy, the EU need to put in place the right conditions and incentives:
- To provide trust in green financial products, by giving clear and reliable information to those who invest in them.
- To improve access for retail investors, and supporting institutional investors to direct their capital towards a long-term impact.
- To Incentivise market participants to be more conscious of long-term risks and opportunities
Valdis Dombrovskis said that, at the EU level, they have already taken first steps:
- Directive on non-financial disclosure (from issuers to investors)
- Integration of the sustainability into the mandate of the European Supervisory Authorities
At the European Commission (EC) particularly, they have established a High-Level Expert Group on Sustainable Finance, which will present its final recommendations in January. On that basis, they will present in March a comprehensive Action Plan. Three directions are already foreseen:
- To integrate sustainability factors into investment mandates.
- To have an EU taxonomy or a classification system for sustainable finance. This would allow the EC to define EU standards and labels for Green Bonds and Green Investment Funds.
- To incentivise lending. The EC is looking positively at the European Parliament’s proposal to amend capital charges for banks to boost green investments and loans by introducing a so-called green supporting factor. This could be done by lowering capital requirements for certain climate-friendly investments.
Read the full speech here.