Banks welcome EU Action Plan on Sustainable Finance
- Ossig: action plan sets out clear, ambitiously scheduled milestones
- Necessary definitions and framework not yet in place
The European Commission has today unveiled its Action Plan on Sustainable Finance. “We welcome the European Commission’s initiative to achieve the Paris climate targets,” said Christian Ossig, Chief Executive of the Association of German Banks. “But if we are to successfully place sustainable investment and finance products, we need a dependable framework.” The Commission’s action plan had now set out clear, albeit highly ambitious, milestones. The first priority was the envisaged sustainability taxonomy, or definition of terms. “Banks have launched many initiatives in recent years to promote and consolidate sustainability,” stressed Ossig. The sustainable finance agenda would now enable the development of innovative and sustainable products. At the moment, however, there was often a lack of clear definitions. The Commission was therefore right to place this issue at the very top of the agenda.
Nevertheless, basic principles of financial stability also applied to sustainable finance. It was important not to overlook the possible risks of sustainable finance. “That’s why we urgently need empirical analyses before even considering the idea of incorporating a ‘green supporting factor’ into capital requirements, for instance,” said Ossig.
To avoid duplication of work, the Commission should, in addition, build on existing standards, such as the Green Bond Principles developed by the International Capital Markets Association.
An overall sense of proportion was required – with regard, for example, to the proposed review of non-financial reporting obligations. Banks should not be burdened with further administrative tasks.
“Responsible safeguards are needed to protect market dynamics in the area of sustainable finance,” added Ossig. “Above all, it’s essential to implement individual measures in the right order and to involve all relevant stakeholders. Sustainable finance is still a delicate new shoot, which should not be overzealously pruned into shape.”