Plan launched to tackle European investment crisis

A consortium of European sustainable finance organisations, including Eurosif, has launched a plan to solve Europe’s investment crisis, on the day the European Commission publishes further details of its expert group on sustainable finance.

Investment in Europe has still not recovered from pre-financial crisis levels. Yet the report launched today, ‘A Sustainable Finance Plan for the European Union’, points out that the European Union has to massively accelerate investment to meet its climate and energy obligations.

The Paris Agreement on Climate Change commits signatories to make investment flows consistent with low greenhouse gas emissions and sets a commitment to keep global temperature increases to well below 2 degrees centigrade. Yet according to the European Investment Bank there is an annual investment gap of €100 billion in funding Europe’s energy infrastructure to reach its climate and energy targets.

The European Union recently announced that it would re-boot the Capital Markets Union to help meet this challenge by setting up an expert group on sustainable finance. It is also boosting the European Fund for Strategic Investment and ensuring 40% of this additional investment helped to tackle climate change.

The consortium welcomes these announcements but says far more needs to be done. It is calling on the European Commission when it undertakes its promised ‘refresh’ of the Capital Markets Union to place a priority on boosting investment in low carbon infrastructure, enhance responsible investment practices and improve the disclosure of climate risk information.

Recommendations include ensuring Europe’s public finance programmes are fully aligned with the EU’s climate targets and developing the green bond market. This would provide investors with the long-dated assets they need to ensure stable long term returns and reduce Europe’s pension fund deficit.

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Ingrid Holmes, Director of the climate and energy think tank E3G said:

“By putting sustainability at the heart of the European Union’s Capital Market Union, the Commission will maximise the potential for economic recovery and future prosperity.”

 

Seb Beloe, Partner, WHEB Asset Management said:

“The Capital Markets Union refresh represents a key opportunity to embed sustainability considerations at the heart of a financial architecture that is fit for the 21st Century.”

 

Leon Kamhi, Head of Responsibility, Hermes Investment Management said:

“We strongly support the Capital Markets Union and its laudable aim of driving jobs and economic growth throughout Europe while stabilising the financial market. We believe that key to its success is the embedding of Europe’s environmental and social priorities into the CMU’s approach to the financing of and the investment in the economy’s infrastructure, industries and future technologies.”

 

Ian Simm, Founder and Chief Executive, Impax Asset Management said:

“With its sights on the next decade, the European Union is understandably seeking to map out the path to further economic recovery while also pioneering worldwide efforts to preserve the environment. This “Sustainable Finance Plan” makes key recommendations for how to harmonise policies in these areas.”

 

Philippe Zaouati, CEO of Mirova, Responsible Investing said:

“The CMU is a unique chance for Europe to rethink how capital markets can contribute to financial sustainability, through the promotion of adapted regulatory frameworks that enable investors to identify investment needs, align the interests of investors and sustainability and encourage them to create innovative tools or adapt existing tools. Sustainable finance must scale up in order for finance to serve the economic, social and environmental needs of the European economy.”