The Socialists and Democrats call on the Commission to endorse the recommendations put forward in a report by the High-Level Expert Group on Sustainable Finance. If the European Union is serious about meeting the COP21 climate goals and successfully managing the transition to a low-carbon society, investments into sustainable development must be stepped up considerably.
The European Fund for Strategic Investment (EFSI), which channels one third of its 250 billion euro of funds into energy, environment and resource efficiency, provides a successful model.
As substantial additional private capital funding will be required to put Europe on the path towards sustainable development, nothing less than a transformation of the financial system brought about by regulatory changes is needed. The S&Ds’ call comes ahead of the Commission’s broad Action Plan on sustainable finance expected for March.
Acting S&D Group leader, Udo Bullmann said:
“Steering the European Union on a path of sustainable development poses a huge challenge, not least financially. According to Commission estimates, additional annual investments of 180 billion euro are needed to meet the EU’s climate targets. If the EU is serious about fulfilling its climate goals and successfully managing the transition to a low-carbon society, boosting sustainable investment must be a priority for our financial system.
“With its report, the High-Level Expert Group on Sustainable Finance has provided crucial guidance on how to manage these challenges. The report’s recommendations offer a practical guide to mainstreaming the concern for a sustainable European economy and society across the most relevant fields of policy and regulation - from financial regulation to standardisation and infrastructure financing. If European leaders want to fulfil their commitments to the COP 21 agreement and the United Nations Sustainable Development Goals, they must act on these proposals without undue delay. The S&D Group will put all its weight behind this agenda. We stand ready to fight against all attempts to side-line this endeavour, which is crucial for safeguarding our common future.”
Pervenche Berès, S&D MEP and spokesperson on economic and monetary affairs, said:
“For the S&Ds, this report comes as we launch our strategy 'Towards a European future of equitable and sustainable well-being for all'. We will fully be engaged to make sure that sustainable development finally enters into the logic of financial markets players.
“The transition towards a decarbonised economy with the scale of investment needed will depend greatly on new forms of financing. Therefore, we support the development of official standards for green bonds, as well as the creation of an EU green bond label.
“The recommendations laid out in the report will also be instrumental in our work on the reform of the ESAs. We have to ensure that the EU supervisors will be able to assess ESG-related risks and monitor the use of sustainability criteria by financial institutions. This will require better clarification of their mandate and allocating them with the corresponding resources."
Paul Tang, S&D MEP and responsible for the parliamentary report on sustainable finance, added:
“The High-Level Expert Group’s report is a crucial step to address the huge challenge in front of us: making money work in the service of a more just and sustainable society. In its action plan in March, the Commission should embrace their recommendations.
“Financial institutions still have billions of exposures in unsustainable assets, including fossil fuels. At the same time, as the report puts forward, at least an annual 180 billion euro in additional investment is needed to address our main sustainability challenges. It will take an enormous effort to put our money where our mouth is. The High-Level Expert Group realises this, and formulates some key recommendations including an EU sustainability taxonomy and an omnibus review* on environmental, social and governmental criteria for investors. Simultaneously, the report acknowledges the need to address stranded assets and to avoid new bubbles. But, on this important point, a greater sense of urgency is needed: we must find ways to include the risks of brown assets.”
* a targeted review for multiple files
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