This article is part of POLITICOs Changemakers series, looking at the players driving European policy.
Green and sustainable finance is all the rage in Brussels.
The new European Commission is promising to present a second legislative package in the fall, including an EU standard for green bonds, a sustainability label for retail investment products and a revision of corporate disclosure duties regarding their environmental impacts.
Green finance is growing fast, pushed by high demand and a heightened policy focus on climate change. In Europe, total assets committed to sustainable and responsible investment strategies grew by 11 percent from 2016 to 2018 to reach €12.3 trillion, about half the Continents total assets under management.
A lot of that money is going to have to be invested in the EUs decarbonization strategy to hit the European Commissions Green Deal goal of becoming climate-neutral by 2050.
The European Green Deal Investment Plan aims to mobilize at least €1 trillion in sustainable investments over the next decade, but more cash will be needed.
Revamping the worlds financial architecture needs a lot of deft plumbers. Here are five people and organizations contributing to greening money flows.
Pool photo by Jonathan Brady/Getty Images
One person has helped more than most to make green financing the agenda-topping issue it is today: Bank of England Governor Mark Carney.
Carney took what was still a relatively fringe issue and gave it a huge blast of publicity, spelling out the stakes in a 2016 speech.
Calling climate change “the tragedy of the horizon,” he went on to say that its worst effects would be felt by our descendants.
“Sadly, with respect to climate, history repeats itself — not as farce but as tragedy, with growing frequency,” Carney said at the time. For many in the financial sector, the speech marked the moment when big money started paying attention to sustainability.
Carney used his authority as both the chief of one of the worlds leading central banks and the head of the global regulatory body, the Financial Stability Board, to push through rule changes aimed at making banks and investors aware of the risks of climate change.
The Bank of England launched stress tests to determine which institutions would be worst affected by a warming planet.
The U.K. and EU are well on the way to imposing binding environmental disclosure requirements on companies and legislating toward net-zero economies, in no small part thanks to Carneys persistence in highlighting these problems before they were mainstream concerns.
“A question for every company, every financial institution, every asset manager, pension fund or insurer: Whats your plan?” Carney told the BBC in December.
Carney isnt dropping climate. When he exits the Bank of England next month, hell become U.N. green finance envoy and adviser to the British government for Novembers COP26 climate summit in Glasgow.
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The European Central Banks new president is determined to make a difference in the fight against climate change — but shes not using the banks €2.7 trillion bond-buying program to do so.
EU lawmakers in Brussels had hoped the Frankfurt-based institution would use the program to favor greener investments, while scrapping carbon-intensive assets from its massive portfolio.
They had good reason to; last September, Lagarde suggested using the ECBs so-called asset purchase program to fight climate change in her Parliament hearing as a candidate for the presidential post.
“Im fundamentally convinced that fighting climate change has to be a central plank of policy,” she said at the hearing.
Lagarde has since pulled back on focusing firepower on green goals, promising instead to preserve market neutrality in the ECBs portfolio and keep the eurozones economy ticking over.
This doesnt mean shes scrapped her green intentions. The ECB has introduced climate change into its macroeconomic forecasts under her presidency, and ensures that eurozone banks take environmental risks seriously.
Closer to home, Lagarde has said the ECBs corporate pension portfolio for employees could hold more green assets.
There has also been talk within the ECB of demanding greener collateral from banks wanting to borrow from the central bank.
An unlikely parliamentary duo
An ideological gulf separates Sirpa Pietikäinen, a former environment minister and MEP for Finlands conservative-liberal National Coalition Party, and Bas Eickhout, the combative Dutch deputy leader of the Greens in the Parliament.
This didnt stop them from forging an unlikely alliance in the European Parliament last year on the issue of sustainable finance. The so-called taxonomy regulation sets rules for financial operators to measure investment products marketed as green against a binding EU standard for sustainable investments, and disclose to what extent they align with it.
When Eickhout got the rapporteurship of the sustainable finance regulation, he brought along the Finn from the European Peoples Party. The reason? To seek out a compromise that would allow them to push the file through Parliament, presenting a united front in the face of a highly divided Council.
The effort worked well.
Both sit on the ECON and ENVI committees and have been MEPs for over a decade, giving them heft both within their political groupings and negotiations with the Commission and Council.
Despite occasional disagreements over the scope of the regulation the two achieved their goal Read More – Source