Making each of the participants “sustainable finance ambassadors”, but also “showing the rest of the world European determination”: this is the stated aim of the European Commissioner for Financial Services, Valdis Dombrovskis, addressing the sustainable finance conference held in Brussels on Thursday 22 March.
The UN special envoy for climate action, Michael Bloomberg, said that the action plan presented by the European Commission on 8 March (see EUROPE 11977) is a “good example of the EU’s leadership in this field”. Referring to the decision of the American President, Donald Trump, to take the United States out of the Paris Agreement, he said that this had, conversely, galvanised the American market players, encouraging them to do more. Unlike the White House, Americans remain committed to the Paris Agreement, he said.
The President of the European Commission, Jean-Claude Juncker, stressed that it would take at least four planets to maintain mankind’s current way of living, producing and consuming. “However, we only have one”, he said, adding that it would cost more to do nothing. Between 2007 and 2016, economic losses related to extreme climate disasters rose by 86%, he reported. In 2017 alone, these losses stood at €117 billion.
“I believe that the financial sector has a responsibility in helping Europe to prepare the economy of tomorrow. It must be part of the solution, not part of the problem”, he said, just a few hours before sending out the same message to the meeting of the heads of state or government.
Ambition versus reality
Another stated aim of the Commission is to gauge the industry's appetite for the measures proposed. Nils Bolmstrand, the managing director of the asset management company Nordea Asset Management, said that there was convincing market demand in this area, but warned against excessively rigid regulation. ““It shouldn’t be about just ticking a box, there has to be something dynamic””, he explained. He also expressed a preference for guidelines, which would make it possible to increase the solutions already set in place by the financial sector.
“Your role will be to optimise with limits, not to maximise. Our role as co-legislators is to put up barriers to your field of play”, said MEP Philippe Lamberts (Greens/EFA, Belgium). MEP Sirpa Pietikäinen (EPP, Finland), who also supports legislation based on incentives, considers that a voluntary mechanism with instruments such as codes of conduct could lead to a situation in which “only the best will move forwards”.
Other attendees called for safeguards to avoid sacrificing the investment yield on the altar of ‘sustainable’. “In energy efficiency terms, we will be better one day and, therefore, the investments will yield more, which will reinforce confidence in the system”, the Belgian Federal Minister for the environment and sustainable development, Marie-Christine Marghem confidently asserted, but added that to do this, “a bit of order, method and time will be necessary”. Juncker said that making sure that our money contributes to a better planet is the “best return on investment there is”.
French calls the consistency
It was then the turn of the French President, Emmanuel Macron, to outline his vision of sustainable finance and stress France’s backing for the Commission’s initiative. “The climate crisis has possibly received less media attention than the financial crisis, but its consequences will last longer”, he said.
Redirecting capital flows into sustainable investments can also, he said, be done by regulating certain markets, such as the carbon price. On this subject, France has already made its choice and intends to increase the price per tonne of carbon on its territory to €84 in 2022.
However, it is looking at a longer-term perspective and considers that the EU should adopt a European minimum carbon price, although well aware that this could run up against considerable resistance. He said that an accompaniment strategy was also needed for areas that will suffer the consequences, as well as a tax at the borders “for those deciding not to go along with this choice”.
Calling upon the EU to make its climate objectives consistent with other sectoral policies, he said that the EU should sign trade agreements only with countries that have signed up to the Paris Agreement – a brief reference to the US decision to back out of the agreement.
Macron also called for a pro-climate European budget and said that setting a target of 40% for the ecological transition would be “ambitious” yet “achievable”.
Let us not be weak in policy, Macron concluded, calling for the EU to show firm leadership and stressing his own intention of defending this vision in talks with his European and global counterparts. (Original version in French by Marion Fontana)