Our key messages to the High Level Expert Group include:
To be truly sustainable, the financial sector must foster a diversity of business models to cater for different types of sustainable projects (local banks, mutuals, credit unions, cooperatives, crowdfunding platforms, public banks, central banks, commercial banks…), that avoids an over-reliance on any one business model, and that does not tolerate moral hazard (taking the benefits while others bear the risks). This means revisiting regulation on leverage and bank structure in relation to too-big-to-fail banks, in addition to the reforms mentioned in the HLEG interim report.
We support the HLEG’s proposals to create classification system for sustainable assets and a system for sustainable asset labelling. The EU should not leave this work to the market but should take the lead in creating a set of precise and democratically agreed criteria for assessing financial assets on environmental, social and governance grounds.
We urge the Commission to promote policies that will encourage a pipeline of profitable low carbon investments. These measures should include a meaningfulprice on carbon emissions in the real economy; ambitious public investments to kick-start sustainable projects; and institutional oversight from the proposed new Sustainable Infrastructure Europe.
The HLEG identified some promising policy areas for further discussion, including updating prudential rules to reflect sustainability risks, and promoting networks of sustainable finance centres to promote best practice. We urge the HLEG to continue its ambitious and open-minded approach and look forward to reading more about these proposals in the final report.