Will Germany block the EU’s sustainable finance drive?

(EurActiv, 2 Jul 2019) The EU is currently finalising a “taxonomy” aimed at shifting financial flows towards sustainable assets. However, Germany is leading a group of countries trying to muddy the waters by removing the disclosure requirement, writes Sébastien Godinot.

Sébastien Godinot is an economist at the WWF European Policy Office

Last week, investors with $34 trillion in assets called on governments to put more ambitious climate policies in place.

Investors are increasingly climate-aware. Many are getting out of fossil fuels and seeking ‘ethical assets’, whether that be to help manage risk, to promote positive change, or to boost their reputation.

However, the climate emergency and the collapsing ecosystem necessitate faster and further-reaching positive change. Time is running out to avoid catastrophe, scientists tell us.

We need a massive sea-change in our economy. Only around 5% of the EU economy is based on activities that are climate-friendly or fully sustainable. We have to shift financial flows from dirty to clean, and pull the plug on all money which funds damaging activities.

According to the European Commission, there is an “investment gap” of €180 billion per year if we want to meet the EU climate target of 40% lower emissions by 2030. Let alone the far greater levels of action required by the Paris Agreement and the Sustainable Development Goals.

But while the oil giants can easily be identified as polluters, and wind or solar energy is known to be carbon-free, much of the economy is far murkier. There is no easy way for an investor to be sure what climate or social impact her or his money will have.

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EurActiv, 2 Jul 2019: Will Germany block the EU’s sustainable finance drive?