02 February 2018

EU Business: Sustainable Finance: Banks urge clarity in EU Action Plan

The EBF called on the Commission to prepare a clear EU Action Plan that will enable the banking sector to actively promote sustainable development and contribute to the fight against climate change without harming financial stability.

The EBF sees the recommendations of the expert group as a defining moment that brings closer an international regulatory ecosystem in which banks will be able to play a concrete role in financing the global energy transition, the decarbonisation of the economy and in achieving the objectives of the Paris Agreement on climate change and the Sustainable Development Goals of the United Nations.

Says Wim Mijs, Chief Executive of the European Banking Federation:

"This is an important moment, also for the banking sector. To properly serve society banks need to be able to act constructively when addressing climate change and the decarbonization of industry. Banks can only do so when there are clear definitions and clear rules that also maintain financial stability. These recommendations are the starting point."

The EBF is particularly pleased to see the group's recommendations for establishing a common taxonomy on sustainability in the EU, which was one aspect addressed in the EBF response to the expert group's interim recommendations. The call for an upgraded disclosure framework for reporting non-financial material information and the development of official sustainability standards also echo the views held by banks.

On the group's recommendation on using incentives and disincentives for investments affecting carbon emissions, EBF notes that the group has not specifically recommended the introduction of a Green Supporting Factor but instead asked the Commission to investigate if the risk-differential of such a factor can be justified. The introduction of a green supporting factor or a brown punishing factor should not contribute to unbalancing risks in the financial system. It is extraordinarily difficult to create proper definitions that are not at odds with the need for accuracy and purity in risk weights in banking.

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