Europe’s banks want an active role for the financial sector in the fight against climate change. They are asking Brussels to draw up an urgent plan based on the recommendations of the European Union’s High-Level Expert Group on Sustainable Finance.
How do you foster a stable economy without putting financial stability at risk? The European Banking Federation (EBF) and the Spanish Banking Federation (AEB) have asked the European Commission to draw up an action plan on an urgent basis that allows the financial sector to make an active contribution to the fight against climate change. The plan should be based on the final recommendations of the European Union’s High-Level Expert Group on Sustainable Finance (HLEG), which was created in 2016 to develop a benchmark framework that would serve as a road map in this field.
The HLEG has just released its final report, Financing a Sustainable European Economy. Its recommendations constitute a decisive step towards the construction of an international regulatory ecosystem, in which banks will play a fundamental role in financing the transition of the global energy system towards a carbon emissions-free economy and to meeting the goals of the Paris Agreement and the United Nations Sustainable Development Goals (SDG).
The EBF and the AEB particularly welcome the expert group’s proposal to establish a common taxonomy on sustainability in Europe Union. As regards the recommendations on whether or not to use incentives for investments relating to CO2 emissions, the banking association points out that HLEG makes no specific recommendation on the implementation of the Green Supporting Factor. Instead, it opts to ask the European Commission to analyze this factor from the point of view of risk.
Likewise, the EBF and AEB expressed their satisfaction that the HLEG report underscores the importance of financial education as a tool for helping citizens to become better informed and more engaged with a sustainable economy. The study recommends that the European Commission resolutely support and promote financial education.
The financial sector to make an active contribution to the fight against climate change.
Wim Mijs, the chief executive of the European Banking Federation, said, “We are at an important point in the fight against climate change and also for the banking sector.” He added: “In order to adequately serve society, banks need to act decisively in the fight against climate change and the elimination of carbon emissions in industry. But they can only do so when there are clear definitions and clear rules that also maintain financial stability. These recommendations are the starting point.”
Antoni Ballabriga, BBVA’s Global Head of Responsible Business, and head of the European Banking Federation’s working committee on Sustainable Finance, said: “We welcome the fact that these recommendations are leveraged on previous initiatives, such as the reference recommendations for investors on climate change (TCFD) and Green Bond Principles. The plan the European Commission is shortly to unveil should define the bases for a more sustainable banking system with a long-term point of view.”
Looking to the future, the two banking associations undertake to closely follow the developments of the European Commission’s action plan. They will also be actively involved in talks on sustainable finance to be coordinated by the Working Group on Sustainable Finances, currently chaired by BBVA’s Antoni Ballabriga, who also represents the European banking sector in UNEP-FI (the United Nations Environment Programme Finance Initiative).