DIE GRÜNEN | EFA im Europäischen Parlament Sven Giegold Am 25. Mai:Grün für ein besseres Europa
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Initiative report on sustainable finance: Green success for financial reform


Today the European Parliament’s Economic and Monetary Affairs Committee (ECON) adopted its own-initiative report on Sustainable Finance. The report was drafted by Green rapporteur Molly Scott Cato (UK) and supported by a large majority of Greens, Christian Democrats (EPP), Social Democrats (S&D) and Left Party (GUE) , while liberals (ALDE) voted against. The aim of the report is to make the financial system more resilient, to align it with long-term goals and to direct more investment in sustainable projects. In its action plan on the same subject, the Commission has announced an ambitious legislative package for May this year.

 

MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:

„This report is a milestone in our commitment to greener and more stable financial markets. This is tail wind for the upcoming legislative proposals of the European Commission. We have built the report on a strong concept of sustainability that encompasses the ecological, the social and the dimension of corporate governance (ESG) in equal measure. In the report we call for a label for sustainable financial products, a uniform taxonomy and common standards for green investments and compulsory disclosure requirements for sustainability factors for companies. These demands are now shared by key players in the financial sector. Europe must finally begin to set the sustainability standards itself in order to become the lead market for green financial investments. Sustainable financial products are also a contribution to the climate targets agreed in Paris.

A sustainable financial system can provide the right incentives as a framework, but it is not an alternative to green investments in the future and strong environmental legislation. With our demand to explicitly exclude harmful investments from sustainable financial products, we were only able to achieve a minimal consensus against the Christian Democrats. It is not good enough to only exclude carbon intensive investments but to allow nuclear and aviation business. Since this is essential for the credibility of this young market, the Commission should clearly define the no-gos in its legislative proposal for a taxonomy.“

 

BACKGROUND

Link to the compromises as adopted, which contain the core of the report:

http://www.sven-giegold.de/wp-content/uploads/2018/04/Final-COMP-Sustainable-Finance-Rapporteur-Scott-Cato.pdf

WON: What we have achieved

  • Broad definition of ’sustainable‘ as ecological, social and governance-related (ESG)
  • Call on the Commission to develop a robust, credible and technology-neutral taxonomy for sustainable investments
  • Call on the Commission and Member States to phase out direct and indirect subsidies for fossil fuels
  • Call on the Commission and Member States to use their public investment to contribute to achieving the agreed climate targets
  • Call for binding stress tests for financial companies to assess the risks of sudden losses in the value of carbon assets
  • Call for a mandate for the European Supervisory Authorities to develop standards for the disclosure and internal risk assessment of ESG risks of financial institutions
  • Demand for binding disclosure obligations of sustainability factors for companies
  • Demand to extend the rules on fiduciary duties of actors in the entire investment chain to include sustainability preferences of clients, regardless of whether they have a possible financial impact or not.
  • Call for an EU standard for green bonds with strong sustainability criteria
  • Call for an EU label for sustainable financial products that meets minimum criteria and is in line with Paris climate targets
  • Call for EU standards for the inclusion of sustainability indicators in ratings of credit rating agencies
  • Call for the analysis of sustainability risks to be added to the mandates of the European Supervisory Authorities and national supervisory authorities
  • Call on the European Investment Bank to make its lending compatible with the Paris climate targets, to withdraw from financing CO2-intensive projects and to provide more capital for environmental investments
  • Call on the ECB to bring its bond purchase programme into line with Paris climate targets
  • Call on the Commission for a binding legal framework for investors‘ due diligence with regard to ESG factors

LOST: What we were unable to achieve in the negotiations

against the conservatives (EPP), liberals (ALDE) and right-wing Eurosceptics (ECR)

  • Strong list of negative criteria on what apart from fossil fuels must under no circumstances be included in a sustainable financial product, such as nuclear energy and airport infrastructure
  • Call for an EU-wide CO2 minimum price and a CO2 border tax
  • Call for credit guidance for the banking sector to ensure that a gradually increasing share of the balance sheet total is invested in sustainable sectors