The EU’s climate protection goals are ambitious, and the green restructuring of the economy will be expensive. Private investors should provide a large part of the necessary funds. That is why the EU Commission wants to strengthen the market for sustainable investments. Brussels has already launched important initiatives, but more is to follow. What exactly is described in a strategic plan that the College of Commissioners is to adopt next Tuesday. The Süddeutsche Zeitung there is a draft of the 29-page document – and some of it is tricky. The aim is to examine whether banks and insurers need to take less risk provisioning for those parts of their investments that flow into green activities.
Finance Commissioner Mairead McGuinness presented one in April Set of legislative proposals and changes to make green investing easier. Investment and insurance advisors will soon not only have to ask customers about their willingness to take risks, but also how important the eco-balance of the investments is to them. In addition, far more companies than before should have to report regularly on sustainability issues – almost 50,000 European companies instead of 11,000. The information on environmental and social issues must also be much more detailed. But the most important thing is the so-called taxonomy. This new classification system determines which economic activity is climate and environmentally friendly and which is not. This should help managers of eco funds or environmentally conscious investors when choosing stocks or corporate bonds.
The system is the first of its kind in the world – and there was fierce competition over what should be considered green. When it was presented in April, the commission excluded the climate assessment of gas and nuclear power plants and announced that it would decide on them by the end of the year. Eastern European countries in particular had urged gas-fired power plants to be classified as climate-friendly if they were to replace coal-fired power plants. Ultimately, they blow even more greenhouse gases into the air. Environmental groups rejected this approach.
The Commission is now taking up the concerns of Eastern Europeans. In the draft of the strategic plan it is self-critical that the taxonomy “could better recognize investments in intermediate steps on the way to sustainability”. Such investments could also benefit the environment and the climate. The agency would therefore consider proposing a taxonomy act that would encourage these investments in transition technologies “especially in the energy sector, including gas”.
For banks, eco-investments should become cheaper
Commissioner McGuinness already indicated this step in an interview with the SZ. Her authority wants to develop a further category for the classification system in addition to green, “a transition category for activities that are not green, but enable the transition to a climate-friendly economy,” she said. The CSU MEP Markus Ferber supports this approach: “So far the taxonomy still thinks too much in black and white categories. More nuances will improve the applicability and acceptance,” says the economic policy spokesman for the Christian Democratic EPP group.
What is also explosive is what the strategic plan announces on the subject of financial market supervision. The Commission wants the Eba in Paris and the Eiopa in Frankfurt, instruct the European banking and insurance supervisory authorities to examine whether a “special regulatory treatment” of green investments is justified. In other words: If insurers or banks put money into eco-projects, they might have to take less precautions against failures; Such investments would therefore be cheaper and more attractive for the financial corporations. CSU man Ferber, however, warns against such ideas: “Just because it says something sustainable,” he says, “it does not automatically mean less risk.”